Investors still have chance to cash in on early tech boom


March 12, 2000|By BILL ATKINSON

INVESTORS shouldn't kick themselves if they think they've missed out on Microsoft Corp.'s huge run-up over the years, or for that matter, the U.S. technology boom.

Investors still have a chance of finding huge winners in Europe and Asia, where the technology boom is in its early stages, experts say.

Demand for products like cell phones, video cameras and computers is swelling, and scores of European and Asian companies -- some of them newly formed --are racing to meet the need.

"It's exploding," says Robert Revel-Chion, co-manager of the T. Rowe Price European Stock Fund, which has $1.5 billion in assets under management.

Says David Lui, portfolio manager of the Strong Overseas Fund and the Strong International Fund, "This is the time to make your move. We basically are very bullish on the [international] technology sector."

One of the best ways amateur investors can tap into overseas technology firms is through mutual funds that invest in them, experts say.

Dozens of these funds exist. And last year many of them had spectacular returns, according to Morningstar Inc., the Chicago-based firm that tracks the mutual fund industry.

BlackRock International Small Cap Equity Fund returned 151.68 percent, and nearly 66 percent of its portfolio was invested in technology, according to Morningstar.

Other big winners included Warburg Pincus International Small Company Fund, up 216.42 percent; T. Rowe Price International Discovery Fund, up 155.03 percent; and Pilgrim International Small Cap A, up 121.93 percent.

Why have Europe and Asia become hot technology markets?

Both have trailed the United States in technology development and are several years behind. To catch up, more companies are being created to make software, computers, chips, cell phones, switching devices and others to offer Internet access.

"Three years ago, there weren't that many tech stocks in Europe," says Vincent Willyard, manager of the Duncan-Hurst International Growth Fund.

If investors wanted to buy stock in a technology company, they ended up owning a diversified firm that was involved in many other businesses, he says.

But recently, venture capitalists have been pumping money into companies, and many are going public. At the same time, Europe's stock market is soaring.

"Everything is technology" in Europe, he says. "Most of the IPOs [initial public offerings] in the foreign markets are just booming. They are three and four baggers."

Another reason for the tech boom is that Asian economies, which were badly beaten in 1997 and '98, are recovering.

Mark J. T. Edwards, a portfolio manager in Hong Kong who works on the T. Rowe Price Emerging Markets Stock Fund, says it was common to be attending a meeting in Korea and the lights would suddenly turn off. Companies were trying to save money.

Now, business seems back to normal.

"What could drive technology for years to come is China, which has 1.2 billion people. China has barely been scratched by technology, and experts say it is 10 to 15 years behind the United States.

"It is a humongous market. On the economic front it is smoking," Lui says.

Lui's favorite stocks include Infosys Technologies Limited, which is based in India and hires engineers to develop software for companies like International Business Machines Corp., Intel Corp., and Microsoft.

"Infosys is going to be a big winner. The stock has already tripled. I see this thing as only the second inning of a nine-inning ballgame," he says.

He also likes Legend Holdings, the largest personal computer maker in China, which not long ago trailed Dell Computer Corp. and IBM in its own country.

"Legend Holdings used its local knowledge to build up a very good distribution center in China, even in rural China," he says.

One of Willyard's favorites is Nokia, a Finnish company that controls about 35 percent of the worldwide cell phone market.

As demand picks up in Europe and Asia, Nokia is "positioned wonderfully to capture this growth," he says. "It is growing tremendously."

Lui expects more technology companies to burst on the Asian and European scene. "There are so many wonderful stocks to invest in," he says. "There is no shortage."

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