One sweeping observation can safely be made about investing in Asia Asian companies have a problem with disclosure. No incident did more to highlight this than the Tsingtao debacle two years ago. In April 1995, investors learnt that Tsingtao, China's biggest brewery and the best known of the "H" shares (mainland firms listed in Hong Kong), had not, as its prospectus had promised, used $114 million raised during its 1993 flotation to expand capacity. Rather, it had loaned most of the money via banks to other Chinese firms. Tsingtao was apparently better at picking pockets than picking winners: its 1994 net profits fell 42%.
Tsingtao is a particularly egregious example of a problem apparent in markets from Bombay to Bangkok. Investors in Asian equities have learnt the hard way that the stocks they purchase often bear little resemblance to the stories they are sold. This is by no means...
