Overseas Stocks Lag U.S. Issues for 1992 : Investments: A robust dollar turned gains to losses for many Americans who invested abroad.

Foreign stock markets mostly lagged U.S. stocks’ performance in 1992, and in dollar terms most overseas markets sank dramatically as the dollar rallied.

The result was below-par returns for Americans investing in foreign stocks, marking the third year in a row that the domestic market was a better place to be.

In Britain, for example, London stock prices rallied 14.1% for the year in local currency, according to Morgan Stanley Capital International indexes. But because the British pound’s value sank against the dollar’s, an American investor in British stocks saw his or her shares devalued.

Result: The 14.1% gain for British investors translated into a 7.4% loss for Americans who owned the same stocks, Morgan Stanley indexes show.

Many foreign markets were weak to begin with last year, victims of a slow global economy and country-specific economic and political crises.

“European economies certainly have slowed down, plus we had the currency devaluation crisis there because of stubbornly high interest rates in Germany,” noted Jeffrey Russell, manager of the Smith Barney World stock mutual fund in New York.

In addition, Russell said, Japan’s market was slammed again as its once-powerful economy continued to ebb, Thailand’s and Brazil’s markets were rattled by political instability, and even high-flying Hong Kong late in the year was hit by renewed friction between China and the colonial government.

Among the biggest winners and biggest losers overseas in 1992:

* Hong Kong still managed to finish with a 27.4% gain for the year in dollar terms, according to Morgan Stanley indexes.

David Mannheim, manager of the MFS Lifetime Worldwide Equity fund in Boston, said his fund is keeping about 6% of its assets in Hong Kong, despite renewed concerns about what China ultimately may do with Hong Kong companies when it assumes control of the colony in 1997.

“The market’s valuation is still reasonable and growth is still good, but you have to (allow) some kind of ‘China discount’ on Hong Kong stock prices,” he said.

* The Mexico City market gained 20%, in dollar terms, for the year. “Long term, you’re going to get very good growth in Mexico,” Mannheim said.

* On the downside, Spain took one of the worst hits, losing 24.8% in dollar terms and 11% in the local currency after it was forced to devalue its currency against the powerful German mark.

* The Germans, meanwhile, suffered with their counterparts, while getting most of the blame for Europe’s slowing economy. The German market index fell 11.9% in dollar terms and 6.2% in marks.

Market pros expect other European stock markets to follow Britain higher next year, once inflation-paranoid Germany allows interest rates to drop substantially. Smith Barney’s Russell warned, however, that a continuously strong dollar could mute European stock gains even then.