There isn’t any shortage of investment advice on the internet. Most of the time, suggestions revolve around stocks or property which others think you should buy.

People saying where you shouldn’t invest are less common. The reason is simple: no one gets paid by dissuading you from buying assets.

Of course, knowing where you shouldn’t invest is just as important as knowing where you should. Here’s four of the worst countries for investors in Asia. You should probably avoid them.

 

1. Brunei

The 2008 Global Financial Crisis happened nearly a decade ago. Yet Brunei is one of a few rare countries still stuck in recession.

In fact, Brunei has suffered five straight years of economic decline. The reason for this small, oil-rich nation’s horrible performance? Low commodity prices and noncompetitive policies.

Oil prices have plummeted since 2014. But while other oil exporters like the United Arab Emirates and neighboring Malaysia diversified their economies well enough to absorb the shock, Brunei didn’t.

Furthermore, unfavorable policies along with Brunei’s gradual transition toward Sharia law have pushed away most potential investors around the world.

InvestAsian published a widely-read article about Brunei’s dire situation. So far, around 5% of their entire population saw it. The locals naturally gave us a lot of hate and some support, but we’ll absolutely continue telling the truth about noncompetitive countries.

 

2. Japan

The story about Japan’s “lost decade” is well known… although their weak economy has lasted closer to three decades.

Following rapid growth in the 1970s and 1980s, the Japanese economy was burdened by high asset prices and spiraling debt levels. It crashed in 1990 and suffered a second blow when the Asian Financial Crisis struck soon after in 1997.

Japan never truly recovered from these two major, consecutive shocks. Their GDP climbed by over 7% on average for many years prior to 1990. Since then, they’ve grown by less than 2% annually.

The nation’s demographic trends are even more worrying. Japan has the world’s oldest population, meaning an inefficient workforce and high public spending on healthcare and pensions.

Not only that, but Japan will face rapid population decline. Their current population will fall from 127 million at present to barely over 60 million before the end of this century. Of course, this will naturally pressure their economy.

Eighty years is a long time. But do you really want to own assets in Japan when such trends exist?

 

Asia is the fastest growing region on the planet. Why invest in a terminally-ill country which is growing by just 1% annually?

 

3. Hong Kong

Okay, Hong Kong isn’t a country. But they absolutely have different market dynamics and fundamentals than mainland China.

Hong Kong also has many things going for it – at least on paper. A strong rule of law, business friendly policies, low taxes, and proximity to mainland China have helped them become Asia’s de-facto financial center.

That’s all great. Meanwhile, inflated asset prices and wider geopolitical trends make investors more concerned than optimistic. You can have the best policies on the planet, but they won’t matter if asset prices are beyond reasonable levels.

Property in Hong Kong is the world’s most expensive. Rental yields are abysmal too, hovering around 1.5% on average which is below the rate of inflation. You can generate higher returns though a bank deposit, minus the lack of liquidity and possibility of a crash.

Beijing’s increasing influence in Hong Kong’s (at least formerly) independent legal and political systems also puts both domestic and international investors on edge.

We certainly understand why some people want to own assets in the world’s top financial centers. But you should consider investing in Singapore which is growing faster and has fewer of Hong Kong’s negative aspects.

 

4. Taiwan

Taiwan’s economy is the fastest growing on this list by far. However, the nation’s property market is perhaps Asia’s most overvalued. Their stock market doesn’t fare much better.

Real estate prices in Taipei are completely out of touch with reality. For example, property prices are higher than anywhere else in Asia compared to the average local salary.

A two-bedroom apartment costs around US$700,000 while a typical Taiwanese makes just US$1,200 monthly. That means saving up for almost 50 years! Rental yields are among the world’s lowest too.

Many problems in Hong Kong also exist in Taiwan to varying degrees – everything from unrealistic asset prices to creeping Chinese influence. Granted, the huge difference is that Hong Kong is a major financial hub with a lack of available land. The same isn’t true in Taiwan.

Want to invest in places with bright futures? Here’s an article about the five fastest growing countries in Asia.

Skip the Next Western Recession

Learn the best places to invest – and where to avoid – by downloading our free Investment Cheat Sheet.

About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He’s an accomplished stock trader and property investor in Thailand, Cambodia, and many other places. He’s been featured in publications such as Forbes, Nomad Capitalist, Property Report, and Seeking Alpha. Download his free investment guide by clicking here.

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