Hi Seeker - Usually when I hear the "US is best for X" I regard it as propaganda. Sometimes it is true.
There's been a generally considered list of good investment countries. Much of the first tier is the same as it was in some documents I have read from 1920.
These evaluations are based on valuing safety above potential returns, this prespective we would use for managing an endowment, trust fund, etc.
First Tier
UK - longest history, generally sceptical investors. Very well established case law facilitates settling disputes, this is why people in third countries will have contracts under UK law.
Canada - Widely regarded as reasonable and predictable, with US paranoid politics.(one reason the reaction to taxing royalty trusts was so strong) Government paying off debt.
US - danger with US is the will decide to freeze funds from some nations or people over some foreign poilcy. Not good if you might end up in the target category. US is 1/4 of world GNP, deepest financial markets, many derivative products make hedging or exiting positions easy. Very high transparence, Reg FD equalizes access to information, insider trading and front running are illegal and enforced often enough to deter much of the activity.
Australia - new rules that say foreigners can't buy real estate hurts them.
Switzerland
Nederlands
Denmark
Norway - dependence on offshore oil is a risk.
Sweden - heavy taxes and many rules cause many business people to leave, like the head of IKEA
Second Tier ***********
Ireland - smaller economy than the UK, instability from Northern Ireland conflict keeps this is second Tier
Finland - Proximity and possible conflict with Russia are a risk, economy is also over concentrated on Nokia and Russian trade.
Hong Kong - This sometimes moves between First and Second Tier, depending on precieved political risk (will the Shanghai crowd in power promote Shanghai at the expense of HK ?), economic risk - HK Dollar tied to US Dollar, HK is heavily dependent on China's economy, and special factors such as SARS and bird flu.
New Zealand is usually considered in the second tier because it is much smaller and heavily import dependent. Political risk causes some people to avoid NZ.
France - silly laws like the 35 hour week don't help, Government picks winners. Plus side is the government is generally competent and does useful things - high speed trains, R&D, etc.
Germany - labor unions too strong, Greens have pushed much biotech out. Still has many skilled people, very strong exporting middlesize companies. Loss of the Deutsch mark, long term costs of reunification, inability to restructure economy, left political tilt keep it out of the first tier.
Spain is considered in this first category by some, others point to Basque problems, etc.
Japan's economy is so big many people consider it in this category, in spite of a lack of transparency in some corporate accounting. Language and cultural barriers mean many insittuions invest through funds or local advisors.
Others
Italy - funny accounting, unstable governments, Mafia control in some areas, active Communist party.
Belgium - an absolute forrest of rules about everthing, Flemish vs. Wallon conflict.
Portugal - Small, emerging economy, dependent on EU economic help.
Chile - small, but the South American country with the most stable economy, resonable income distribution. Economy has diversified from Copper exports, but needs to diversify even more.
South Africa - Long term political stability - what happens after Nelson Mandela dies ? is one of many risks.
Central Europe - Poland, Chezh Republic, Hungary, etc. - not enough history, laws and economy are still changing, so not for the risk averse investors. |
