Newspaper article THE JOURNAL RECORD

T. Rowe Price Looks outside U.S. for Stock Investments

Newspaper article THE JOURNAL RECORD

T. Rowe Price Looks outside U.S. for Stock Investments

Article excerpt

NEW YORK -- Money managers at T. Rowe Price Associates Inc., the 11th largest U.S. mutual fund company, are betting there'll be better places to buy stocks next year than in the U.S.

"We expect a high single digit gain in the U.S. market in 1997," said David Testa, chairman of Rowe Price-Fleming International, the international money management unit of Baltimore-based T. Rowe Price which has $97 billion under management.

That's a big change from last year and this, when the Standard & Poor's 500 Index returned 37.6 percent and 20 percent respectively. In the past two days, the Dow Jones Industrial Average has tumbled about 100 points, indicating that T. Rowe Price managers might be right when the say that the market won't soar next year because interest rates won't go much lower and earnings growth is slowing. "We are drawn to more ideas overseas," said Testa, speaking at T. Rowe's annual investment outlook conference in New York. That's because stocks are generally cheaper outside the U.S. That means the weighting in T. Rowe's Global Stock Fund, which now has about 33 percent of its $14 million in the U.S., will probably creep down to 30 percent of assets, Testa said. Testa and other analysts at T. Rowe reckon European bourses will post returns of about 15 percent, as companies realize a pick up in profit growth accompanied, perhaps, by additional cuts in interest rates. "In Europe, there's more focus on improving returns to shareholders and a greater understanding that companies can't just operate as large bureaucratic enterprises in today's environment and hope to be competitive," he said. Testa reckons select markets in Latin American and Asia could jump even higher than those in Europe. In Asia, Testa has high hopes for Hong Kong, which should benefit from China's improving economy. China cut interest rates twice this year, the first cuts in five years. …

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