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To: Jay Rommel who wrote (4032)	10/8/1998 12:34:00 PM
From: Jay Rommel	Respond to of 7342

ADR REPORT - Telco ADRs beaten up, focus on dollar biz.yahoo.com NEW YORK, Oct 8 (Reuters) - Telecommunications company American Depositary Receipts were undercut Thursday after Merrill Lynch downgraded Finland's Nokia Corp. (NYSE:NOKa - news) and Sweden's A.B. LM Ericsson (Nasdaq:ERICY - news) . Merrill cut its long-term ratings on the pair to accumulate from buy. Nokia ADRs were down 7-3/4 at 61-1/16; Ericsson, the volume leader among ADRs, was off 1-1/4 to 15-11/16. ''Merrill's downgrade is definitely hitting those shares hard, but the worst might be over for the European ADRs,'' said a senior ADR trader at Dresdner Kleinwort Benson. Other telco stocks moved lower in sympathy. France's Alcatel Alsthom (NYSE:ALA - news) was down 1/2 at 17-1/4 in heavy trading. Alcatel issued a profit warning in September, which brought the stock sharply lower, ahead of the recent market sell-off. Brazil's Telebras (NYSE:TBR - news) was off 2-5/8 at 64-1/2, while Mexico's Telefonos de Mexico (NYSE:TMX - news) was down 15/16 to 41-9/16. ''The techs, like SAP and the telco ADRs, have been beaten up a lot, but I think they're going to outperform in the next market rally,'' the Dresdner trader said. The falling dollar is also a focus among ADR investors and traders. ''The slide of the dollar versus the yen is the focus and it rattled the Europeans, but the concern now sits with Japan, because we are seeing both long-term Treasuries and stocks selling. So maybe they're starting to sell both now,'' said a trader. But as the dollar loses value against the yen, one fixed-income portfolio manager sees this as a possible end to the U.S. recycling of Japan's domestic capital surplus. ''If that is changing, you'll see the restoration of emerging markets,'' especially in Asia, said Michael Rosborough, a fixed-income portfolio manager at Pacific Investment Management Co. Rosborough joined a series of round-table discussions at the Euromoney magazine emerging markets investment conference in New York. The dollar is currently off one yen against the Japanese currency, at 119.69 ADRs are caught in the U.S. market sell-off. The Dow Jones Industrial Average was down 172.50 points or 2.23 percent to 7569.50. The Bank of New York index of 439 leading ADRs was off 2.77 points, or 3.01 percent, to 89.22. The ING Barings Latin American index of leading area ADRs was off 3.43 points, or 3.26 percent, to 101.91. German software maker SAP AG (NYSE:SAP - news) (quote from Yahoo! UK & Ireland: SAPG.F) was off 2-1/8 to 30-15/16, while autos and aerospace giant Daimler-Benz AG (NYSE:DAI - news) was among the biggest losers on the New York Stock Exchange, off 8-3/4 to 66. Japanese electronics and media giant Sony (NYSE:SNE - news) was off 4-13/16 to 64-15/16.