I read recently William Pesek article on Bloomberg about Chinese stock markets resembling a casino. I think this is wrong comparison, in casino your expected pay-off in negative, the longer you play the more likely that you loose (zero makes you loose on average). While I think that China stock markets are the opposite, expected payoff is positive and the longer you play the more likely that you win.
I know all the arguments, poor governance, lack of transparency, administrative interventions etc. These are all valid arguments, but the botoom line is this. Look at various regions of the world and potential output estimates, i.e. how fast economies can grow in the long run (say next 10 years). In the case of many Asian economies the answer would be 6-10 percent, in the case of Central and Eastern Europe answer would be 5-10 percent. In the case of some Arab states growth rate could be strong as well but conditional on oil prices. In some African coutries it could be more than 10 percent, conditional on reforms momentum. In the old capitalist world potential output could be between 2 and 3 percent, and in some countries less than 2 percent. In the long run investment returns should be correlated with output growth.
Get ready for a big change. Today rating agencies get excited about fiscal position of a country X, its public debt, FDI, current account deficit etc. In next few years you will see a dramatic change, scoring matrix will look at number of patents, country intellectual capital scoring and other measures intangible assets. Here Asia continues to score particularly well.