Month’s Major Surprise? Foreign Stocks’ Rebound

The big surprise so far in 1998 may be that investors have made the most money in the place they least expected to: foreign stocks.

The average international stock fund was up 2.3% for the month, through last Thursday, according to Lipper Analytical.

Many of Asia’s depressed markets rallied sharply from mid-January. The average Japanese stock fund, for example, was up 7.8% for the month. The South Korean market soared 48%.

Whether those markets can sustain their rebounds is a big question. The worst of their economic hardship lies ahead, most analysts say, as those economies deal with a wave of bankruptcies and other casualties from their dramatic currency devaluations.

Peter Spano, manager of the Preferred International stock fund in Fort Lauderdale, Fla., believes there is “no real need to hurry” in buying depressed Asian stocks. “A number of those companies aren’t going to survive” 1998, he says.

Even so, he expects to be prospecting much more among Asian issues as the year progresses. In the meantime, Spano and international fund managers like Andrew Kim of the Sit International fund in New York still see the potential for good returns in European stocks this year.

Kim says European companies should gain from the Continent’s own cyclical economic rebound, lower exposure to Asia than many U.S. companies, and lower interest rates as major European nations move toward monetary union.

The average European-region stock fund is up 3.2% this year.