BUSINESSWEEK ONLINE : MAY 22, 2000 ISSUE
COVER STORY Getting the Lowdown on Global Highfliers Web sites offer infinite info on foreign winners--and what to look out for From a spare bedroom in his San Mateo (Calif.) home, Ben Esposito, a 43-year-old entrepreneur, trolls the Internet to find promising equities around the globe. His 17-stock portfolio includes such far-flung holdings as Portugal's Espirito Santo Financial Group and the New Zealand-based forest-products company, Fletcher Challenge Forest. ''You just have to overcome your fears and understand that there are a lot of great companies out there,'' says Esposito. For investors such as Esposito, the allure of foreign stocks is clear. In Europe, Asia, and Latin America, privatization, deregulation, and corporate restructuring have given once slumbering companies a tremendous boost. And some of the world's hottest small caps are now found in new growth-stock markets outside the U.S. While the Nasdaq has floundered lately, Germany's Neuer Markt, as of May 8, was up 42% and France's Nouveau Marche 47% this year. But currency swings, political shifts, and uneven financial-reporting standards can make foreign stocks and economies hard to evaluate. How many U.S. investors have tracked the plunge in the euro, for instance, or the outcome of recent elections in Chile and Argentina? Language differences only add to the complexity. Fortunately, the Net is galloping to the rescue. Dozens of English-language financial Web sites now provide quotes, data, and news and analysis on global companies. ALL GREEK. These sites are far from perfect. Some of the key sources of information that they link to aren't in English. Price quotes are generally delayed 20 minutes or more. Data on smaller companies may be skimpy. Still, using these sites determined investors can get enough information to gain international stock exposure without having to buy mutual funds. Financial advisers recommend that investors hold 10% to 20% of their portfolios in foreign stocks. The easiest way for Americans to buy shares in foreign companies is still via American depositary receipts. ADRs represent ownership of shares held by custodian banks, are quoted in dollars, and trade in the U.S. The 2,200 or so ADRs now trading represent everything from blue chips, such as DaimlerChrysler (DCX), to small-cap growth companies, such as Elan (ELN), a promising Irish drug company, or China.com, a Chinese Internet portal. A good place to start your research on ADRs is J.P. Morgan's (JPM) www.adr.com Web site. The free site has detailed information on most listed ADRs and more than 100 key unlisted ones. Investors can search adr.com both by company and business sector or browse companies alphabetically. The site provides earnings estimates and buy, sell, or hold recommendations based on the consensus view of financial analysts. Among the big companies analysts have a ''strong buy'' out on: Japan's Nippon Telegraph & Telephone (NTT) and Mexican media giant Grupo Televisa (TV). Bruce Tennen, 40, a mortgage banker in suburban Detroit, uses the site to help ferret out the best tech and telecom stocks globally. In the past three years, he has bought red-hot Finnish mobile-phone company Nokia (NOK); its Swedish rival, Ericsson (ERICY); and British mobile-phone giant Vodafone AirTouch (VOD). All have soared. One advantage of diversifying overseas: Nokia and Ericsson ADRs have climbed 17% and 35%, respectively, this year through May 8 despite the U.S. tech stock correction. That makes them two of the hottest ADRs in adr.com's rankings. You can zero in on growth ADRs using another adr.com tool that lets you scope out the biggest shareholders in each company. For instance, you'll find that the savvy Janus Worldwide Fund (JAWWX) is the top holder of ASM Lithography Holding (ASML), a semiconductor equipment maker in the Netherlands. Another source of growth plays is europeinvestordirect.com's Hot 50 ADR list. It ranks ADRs by earnings growth potential, based on analysts' consensus earnings estimates. COMPANY PROFILES. If you're even more adventurous, some U.S. brokers offer stocks traded abroad as well as ADRs. Big brokers, such as Merrill Lynch (MER) and Charles Schwab (SCH), for example, feature services for buying such shares, as do Internet brokers Globeshare.com and Intltrader.com (BW--Feb. 14). To research these plays, an excellent starting point is the international editions of publications such as Business Week (www.businessweek.com) and The Wall Street Journal (www.wsj.com), as well as www.ft.com, the Financial Times site. Worldlyinvestor.com and other online investment publications are also expanding overseas market commentaries. And don't overlook www.wisi.com, from Bridgeport (Conn.)-based Wright Investors' Service. It profiles 18,000 corporations worldwide, including many that other sites don't follow. For instance, all the basic data are there on such stars of the Neuer Markt as EM.TV & Merchandising, a Munich media outfit, and Intershop Communications, a Hamburg e-commerce software company. EM.TV's shares are up about 16,000% and Intershop's 1,800% since their initial public offerings in 1997 and 1998, respectively. Dozens of excellent sites focus on a single region or market. Investor Esposito especially likes the Web sites run by stock exchanges, such as Hong Kong's (www.sehk.com.hk) and the Brussels-based Easdaq market for growth stocks (www.easdaq.com). You'll find links to many stock markets at Intltrader.com, a U.S. broker specializing in foreign stocks. Among regional sites, two good bets are latinstocks.com, which covers 1,000 of the biggest Latin American companies, and www.asiastockwatch.com. But be aware of foreign shares' particular risks. Wisi.com even has a special section, ''Japanese Accountants' Mistakes,'' documenting mathematical errors in company financial filings. Not long ago, you would rarely hear of such gaffes. Now, they're being broadcast worldwide. By going onto the Internet, you can get the good, the bad, and the ugly on foreign companies. Best Bets For adventurous investors, some U.S. brokers, including Merrill Lynch and Charles Schwab, offer services for buying stocks traded abroad, instead of going the usual route: buying ADRs, in which the shares are actually owned by banks By THANE PETERSON _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Getting the Lowdown on Global Highfliers TABLE: Surfing World Markets (extended) INTERACT E-Mail to Business Week Online

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