The broader blue-chip indexes in the region didn't collapse, getting mixedcues from New York on Monday, when the tech-heavy Nasdaq Composite Index's7.6 per cent fall contrasted with the 2.7 per cent rebound of the Dow JonesIndustrial Average.

Midmorning Tuesday in New York, the industrial average was up 1.5 per cent,or 172.18 points, at 11394.11, while Nasdaq was down 1.3 per cent, or 53.76points, at 4169.92. Meanwhile, Japan's Nikkei slipped 0.6 per cent Tuesday,while South Korea's index fell 1.9 per cent and Singapore's Index slipped0.6 per cent. But Monday's sharp retreat by US new-economy stocks hit theirAsian counterparts hard on Tuesday. South Korea's high-tech Kosdaq marketslumped more than 5 per cent. Among Korean companies, Dacom Corp plunged 15per cent and SK Telecom Co dropped 5.9 per cent. Tokyo's Internet investmentgiants also fell hard, with Hikari Tsushin falling 7.3 per cent and Softbanklosing 5.8 per cent. Yahoo Japan suffered a 13 per cent decline.

In a mood to sell
In South Korea, Kim Hong Nam, a broker at Daishin Securities, said about$4.49 billion of rights issues and bonus issues are scheduled to be offeredon Kosdaq this month and next. Supply of stocks is increasing, just asindividual investors and foreign institutions are decidedly in a sellingmood, Kim said. Given that imbalance, a further fall of the Kosdaq by 25 percent or so can't be ruled out, he said.

Some analysts argue that further declines by Asia's technology sector wouldbe a good thing. After months in which fund managers closed their eyes tovaluations and bought tech stocks to avoid being outdone by more aggressivecompetitors, many investors said the day of reckoning for new-economygroupies - though painful - would be salutary for the market. There was `alot of ugly fat' in the market, with investors buying high-tech shares withno understanding of their prospects, said one New York-based fund manager.``This is a wake-up call'' and it is probably preferable if the sell-down onNasdaq goes on for a while, he said.

A Singapore-based fund manager agreed, saying Nasdaq will have to fall anadditional 15 per cent or more to really deflate the technology bubble.Monday in New York was "just an hors d'oeuvre. You haven't gone to the maincourse yet,'' he said. That doesn't mean that the market's fascination withnew technology is over, observers said. It is just that investors are likelyto become a lot more selective. Quite likely, the market wouldn't bereceptive if a company such as Pacific Century CyberWorks tried to placeanother US$1 billion issue of new shares at more than US$2.57 a share, as itdid last month, noted a Singapore-based fund manager with an Europeaninvestment house. PCCW closed Monday at HK$16.80 with the market's holidayTuesday temporarily saving it from further decline.

Launching global tech fund
Managers of technology funds weren't despairing Tuesday. ``This is a greatbuying opportunity,'' said Kim Teo, chief executive officer withSingapore-based CMG First State Investments, which will launch a new globaltechnology fund today.

Teo said he had expected at some point the kind of volatility now being seenin the tech sector, and the ordeal could serve to wring some of the morespeculative interest out of the market. That will leave investors lookingmuch harder to see which business models `are robust,' he said. Teo saidthis discriminating investment style has served CG First State well, withits first technology fund - which it launched in October - avoidingInternet-concept stocks and focusing on companies such as Asia'ssemiconductor suppliers. The second fund will focus on `infrastructure,hardware and software companies which facilitate wireless and Internetinteraction and commerce.'

In any case, analysts in Asia do not expect the hints of panic selling seenin the region Tuesday to get out of hand. While Nasdaq might take a while tosettle down, it was a good sign that the money flowing out of technology washeading into the blue-chip stocks of the Dow Jones Industrial Average, saysManu Bhaskaran, the regional strategist with SG Securities in Singapore.But without a steady Nasdaq, Tuesday's downtrend in Asia could continue,some said. Analysts differed on whether Nasdaq's fall will convince AlanGreenspan to put further interest-rate increases on hold for now. SG'sBhaskaran said the likelihood that Greenspan will raise rates by anotherquarter point at the Fed's next policy meeting remains high, unless thereare clear signs of a slowdown in the white-hot US economic expansion.Others, though, were more optimistic that rates will stay put.

(The authors are reporters of The Wall Street Journal)