Rumors are spreading warning of a looming economic crisis in Vietnam. Vietnam's trade deficit for this year stood at US$14.4 billion as of May, surpassing the Southeast Asian country's total trade deficit last year of $11.3 billion. By the end of the year the trade deficit is expected to amount to more than $30 billion. In contrast, the country has only $20 billion in foreign currency reserves, prompting the warnings of an economic crisis. At the same time, Vietnamese stock prices have plummeted more than 50 percent so far this year, while real estate prices have dropped between 30 to 50 percent.

Korean investments in Vietnam total some $13.5 billion, making Korea the largest investor in the country. Korean investments in Vietnam's stock market alone total $2.7 billion, accounting for 90 percent of foreign investments in the bourse there. But in addition to the already halved value of Vietnamese stock prices, huge losses are expected in investments made in that country this year.

The problem is not just relegated to Vietnam. Following a boom in investments in overseas funds last year, Koreans bought $52.4 billion in foreign stocks. That's more than a three-fold increase from $15.3 billion in 2006. As of the end of last year, Koreans held $76.1 billion worth of foreign stocks and that amount rises to $116.6 billion if you include investments in foreign bonds.

In June of last year, the Korean government even offered tax breaks on profits gained from investments in overseas stock markets. The government had encouraged overseas investments in order to maintain Korea's export competitiveness by keeping the won from strengthening. Booming stock markets in China and India and other emerging markets led to high returns, leading more people to invest their money overseas. Actual returns on overseas stock investments last year are estimated at close to W9 trillion (US$1=W1,005).

But due to the impact of the global economic slowdown this year, losses from overseas stock investments are estimated at close to W12 trillion. Not only have all of last year's profits been erased, but the principal is dwindling as well. Overseas stock investments, once touted as being among the next engines of growth capable of generating huge amounts of wealth for the state coffers, have become a source of worry. Red lights have begun flashing for investors who have been flocking to any new form of investment, blinded by the lure of fast money, without properly gauging the risks.