For one thing, investors are dealing with companies operating far away, in a very different economic and political environment. For another, financial regulatory and supervisory practices in some of these countries are less welldeveloped and transparent. In addition, investors may have felt rather well “protected” from risks – for a couple of reasons.
First, past assistance packages by the International Monetary Fund (IMF) and other international agencies may have led them to believe that the international community would always come to the rescue if worst came to worst. Second, many investment advisers evidently were not terribly fussed about the exchange rate risk because most Asian currencies were fixed to the U.S. dollar.