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To: marginmike who wrote (42296)	11/30/2000 8:42:10 AM
From: Box-By-The-Riviera™	Respond to of 436258

Thursday November 30 7:29 AM ET Global Funds Buy Into Falling U.S. Stocks By James Saft LONDON (Reuters) - Global fund managers are buying into falling U.S. stock markets but many are also raising cash holdings as evidence mounts of a slowdown in U.S. economic growth, a series of Reuters polls released on Thursday showed. Polls of 46 fund managers and strategists in Japan, continental Europe, Britain and the U.S. showed a move into U.S. stocks and out of Japanese assets combined with selective acquisition of cash. The past month has seen continued falls in major global equity markets as evidence mounts that the U.S. economy, the prime engine of global growth and corporate earnings, is cooling. But investors said that the balance of probability still lies with a gentle slowdown in global growth, leaving stock market falls overdone in many cases. ``People are still adding to their holdings in the U.S. because there is the sense that there will be a soft landing here and that possibly the Fed will even have to cut interest rates, which would be good for U.S. stocks,'' said Leila Heckman, managing director at Salomon Smith Barney in New York. Investors added to U.S. stock positions in every region except Europe, where holdings were flat. New growth data released by the Commerce Department on Wednesday showed the U.S. economy again losing steam in the third quarter, with growth slowing to an annualized rate of 2.4 percent, less than the 2.7 percent rate originally reported. With orders for U.S. durable goods dropping sharply in October and the nation's consumer confidence at its lowest level in more than a year, economists said the economy is likely to slow even further. But few see recession around the corner. ``It seems to me that it would be right despite all the short run doom and gloom to be relatively optimistic about equity markets next year,'' said Keith Skeoch, who as chief investment officer at Standard Life in Edinburgh controls a portfolio of $112 billion. ``Old economy shares are discounting a recession... but global growth will settle down somewhere close to trend.'' Many investors, including those in Europe and Britain, upped cash holdings. Investors usually take refuge in cash in times of market trouble, as its value is less volatile and does not fall in tandem with bourses. Losing Patience With Japan Investors in every region cut back on Japanese equity holdings, while all but Japanese funds trimmed back on Japanese government bonds. Managers have been building up positions in yen assets for more than a year and a half, betting that Japan will shake off its economic lethargy and profits will pick up. But recent signs of an increase in capital expenditure have not translated into market gains and the Nikkei 225 index is now 30 percent below April peaks. ``We have decided to underweight Japan from overweight,'' said Steve Cleal, head of balanced funds at Morley Fund Management in London. ``Economic news has been pretty positive but the reaction from investors hasn't been that strong. The trigger has been pressed but not much has happened.'' Japanese investors said uncertainty over Japan's political situation and sluggish stock prices have been supportive for Japanese bonds as have signs the economic recovery is faltering. ``Deflationary fears in Japan's economy have revived,'' said Masayuki Hoshina, an economist at Okasan Economic Research Institute. But despite sings of a nascent rally in the euro as U.S. growth slows, investors cut back on holding of euro zone stocks. ``We're still a bit more bullish about the American stock market compared to the European stock markets,'' said Kommer van Trigt, senior portfolio manager with Robeco Group in the Netherlands.