To: Boplicity who wrote (3364 ) 8/6/2000 4:28:39 AM From: allen menglin chen Read Replies (1) | Respond to of 13572 Fears of new hi-tech crash feared Dive in US mutual funds could spark world slump ?Investors exit after a disastrous July Paul Farrelly, city editor Sunday August 6, 2000 Fears are growing in top financial circles of a further slump in hi-tech shares, which may prompt a global stock market crash. Concern focuses on the huge US mutual funds sector, where investors appear finally to have lost patience with 'growth funds' after a disastrous performance in July. A large-scale exit would, in turn, prompt a massive sell-off of telecoms, media and technology (TMT) stocks, with huge reverberations for world markets. One large fund at the centre of the worries is the Denver-based Janus Capital Corp, which manages £200 billion in assets. Its two main international funds, Janus Worldwide and Janus Overseas, were worth £33bn earlier this year. Among their biggest investments are £2.1bn of shares in Finnish mobile phone maker Nokia, £1.4bn in Vodafone AirTouch, £360m in Colt Telecom and £540m in Spain's Telefonica. 'There is a growing concern that redemptions will see mutual funds cut their holdings,' said one UK equity strategist. 'They run lots of tech and tech's got whacked.' Another senior City broker added: 'For Janus read an awful lot of other funds out there. Lot of New York funds have nothing but growth stocks, and the man in the street is finally taking fright.' The fall-out from the hi-tech retreat claimed another scalp in the UK last week, as computer group ICL scrapped its flotation. Two of the high est-profile internet firms, Boo.com and ClickMango, have already shut up shop, while online music retailer Jungle.com has also postponed its flotation. Despite market turbulence and prices at a record high, individual US investors have remained bullish, investing a record £130bn in the mutuals, the US equivalent of unit trusts, in the first six months of this year. But in the past week the mood has changed. Average US equity funds fell 15 per cent in value in the third quarter, the biggest quarterly fall since 1990. This weekend, however, Janus tried to quash rumours of big sell-offs, including Nokia shares, by insisting its funds had not suffered any 'material redemptions' in July. But brokers fear turbulence stretching into the autumn - traditional crash territory - especially if US interest rates rise. 'Some highly rated hi-tech companies will finally get back to fair value,' said Terry Smith, head of City firm Collins Stewart. 'It's a hell of a long way down from here.' Markets braced for bellwether Cisco's results World markets are bracing themselves for the announcement on Tuesday of internet network equipment maker Cisco Systems' fourth-quarter results. Cisco, the second-biggest company on the planet after Microsoft, is seen as a bell wether for new economy stocks. Mike Ching, Merrill Lynch's influential US internet analyst, said: 'If they disappoint, it's panic time.' The consensus is that revenues should grow by 11 per cent to $5.25 billion. Earn ings per share are expected to be 15 cents. Analysts want to see if Cisco anticipates a US slowdown: 'If these guys are cautious it could get messy.'observer.co.uk