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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (90)	2/24/2000 12:07:00 PM
From: John Pitera	Respond to of 33421

FUND VIEW-Beware of Asia tech sector bubble By Tamora Vidaillet Thursday February 24, 4:45 am Eastern Time SINGAPORE, Feb 24 (Reuters) - As thousands of Hong Kong investors scramble to take a punt on Asia's latest Internet pipe dream, a fast-growing global technology fund is warning of the trappings of an Asian bubble. Cheung Kong group's initial public offering (IPO) for Tom.com, a Chinese-related information and entertainment portal, is forecast to be 2,000 times subscribed. It has characterised the frenzy some analysts expect to spread to other IPOs in the region this year. ``What you're going to get in Asia is massive hype associated with these Internet portals and I think for a time, these things will do very well,' said Brian Ashford-Russell, head of specialist technology at Henderson Investors in London. ``It will be very speculative, very frothy, a lot of money will be thrown at the sector and there will then be an almighty bust,' he told Reuters in a telephone interview. LIGHT ON ASIA, HEAVY ON U.S. AND EUROPE Henderson Investor's Global Technology Fund ranks top among international information and technology funds available in Singapore, Reuters' Lipper Asia shows. It only has around 12 percent of its current portfolio invested in Asia, including Japan. The Singapore feeder fund which is worth S$151.3 million (US$88.5 million), posted growth of 126 percent in the six months to January 31, 2000. This far outstripped growth of 68 percent registered by United Global Technology which ranked second in the group, according to Lipper. ``The driver of the portfolio has not been Asia. Asia has not been the place to invest as a technology investor,' Ashford-Russell said. ``It's been all right but the Asian technology sector as a whole has dramatically lagged the performance we've generated in the U.S. and Europe.' He would soon be coming to this region to look at new opportunities but had no plans now to increase his Asia weightings. The group's key investment themes for the year included companies that enabled e-commerce, infrastructure suppliers, software application providers and semiconductor producers. ``There just aren't many solid Asian companies around in some of these key sectors. If you want to play infrastructure companies like telecoms, the highest quality ones are in the States for example,' he said. ``And exposure you can get to the Taiwanese semiconductor industry is exposure you can get in many other parts of the world.' Nevertheless, Henderson's Asian holdings include Singapore-based Internet solution provider Datacraft Asia , Taiwanese semiconductor foundries United Microelectronics Corp and Taiwan Semiconductor Manufacturing Company . Japanese custom chipmaker Rohm Co Ltd accounts for two percent of the Singapore fund. Other Asian markets in which the fund holds stock include Hong Kong and South Korea. India was a recent growth market the Global Technology Fund had not invested in due to difficulties in making direct investments there. NASDAQ VERSUS ASIA BUBBLE While some analysts predict the downfall of the worldwide tech-stock dream, Henderson stood by the Nasdaq's (^IXIC - news) tremendous gains. ``We're not talking a bubble on the Nasdaq. I think the quality of companies in the U.S. is very high indeed.' ``Where we're likely to see crashes are in the business-to-consumer sectors in Asia and Europe where the U.S. has already had its bubble pricked.' The business-to-consumer market was typically the first market that tended to emerge in the technology stock cycle, with portals like electronic book sellers going public. ``That cycle began in the States in 1996-7, did extremely well in 1998 and the boom came to an end in April 1999. That (U.S.) sector collapsed and never recovered.' Europe was about 18 months to two years behind the U.S. in this cycle and was likely to see a share price collapse from this summer, he said. ``Asia may be a year or two behind Europe and we will see a similar cycle. This area is not where we see strong fundamental long-term attractions.' OPPORTUNITIES SEEN IN JAPAN, KOREA One theme that figured high on Henderson's investment list, however, was cashing in on laggards of IT spending like Japan. ``Japan is years behind the rest of the developed world in terms of IT spending and I think there will be considerable catch-up there. That's why some of the companies we're playing include companies like Oracle Japan ,' he said. Japanese stocks account for six to seven percent of the fund's total portfolio. Ashford-Russell said he had also earmarked South Korea as one area that he might increase his weighting. ``One area that continues to be pretty weak but which should be much stronger in the second part of the year is the computer memory sector which obviously impacts on the Korean memory companies.'

To: John Pitera who wrote (90)	2/24/2000 3:09:00 PM
From: Chip McVickar	Respond to of 33421

John, >>The DJIA has not rallied off of it's 10200 base and a decline below 10K on the DJIA would mean a test of more significant support at 9640<< Looks like we might see your statement come true. Chip