Whether or not their worries turn out to have been prophetic remains to be seen. But there is no doubt that holding some overseas stock makes sound investment sense.
Indeed, exposure to the more exotic markets has resulted in some phenomenal returns this year: the Bangladeshi stock-market, for example, has netted a sterling return of 285 per cent over the past 12 months, Russia's 119 per cent, Venezuela's 99 per cent and Hungary's 88 per cent.
Deciding which markets to opt for in advance, however, can be hazardous: Thailand (-32 per cent), South Africa (-27 per cent) and Korea (-25 per cent) can count themselves among the year's investment dogs.
Nonetheless, as private investors become less parochial in where they invest, a growing number of unit and investment trusts exists to cater for them.
The Independent today embarks on an alphabetical tour of the world's equity markets. We begin by looking at Argentina, Australia and Austria, three markets which, so far this year, have failed to deliver.
Argentina: Since the military junta was ousted in 1983, much has been done to restore the confidence of international investors.
Pegging the Argentine peso to the US dollar has been one of the most important developments, and inflation - which at one point reached over 7,000 per cent each year - has been reduced to much more manageable levels. The country has a rich agricultural base and already has a wealth of energy resources, despite the fact that only about a third of it has been properly surveyed for oil and gas.
On the downside, while the move towards privatisation and a free market has been welcomed, corporate rationalisation has led to rapidly falling wages and unemployment now nudges 20 per cent. It is economic pressures like these that worry international investors, and provoked a capital flight of $8bn in 1995.
Nonetheless, the advent of domestic pension funds in 1994 - which are expected to contribute nearly pounds 2bn annually to the stock-market - should provide long-term support for equities. Of the 165 companies listed on the Buenos Aires stock exchange, the most important are in the petrochemicals, oil and telecommunications sectors, among whom Telefonica and the oil giant YPF have the highest profile. Total market capitalisation is around pounds 25bn.
Many Latin American countries are still suffering from the collapse of the Mexican peso in 1994, and exposure to the Argentine market this year has resulted in a relatively lack-lustre sterling return of 8 per cent.
Opinions are divided on whether this can be improved upon next year, but if the country continues its (albeit slow) crawl from recession, then LatInvest, an institutional broker in London that specialises in the region, believes the supermarket chain Disco, and Sidera, the privatised state steel company, are the sort of companies that are most likely to benefit in the short term.
Australia: The land of XXXX, koalas and a superior cricket team has had to face up to a conflict of interests over recent years. While Anglo-Saxon blood runs deep through the veins of most of its 18 million inhabitants, 60 per cent of Australia's trade is now carried out with its geographically nearer Asian neighbours.
This can be seen as either a blessing or a curse. On the one hand, Asia provides a growing and easily accessible market. On the other, low wage rates in Asia ensure that Australian companies exporting to the region must pare profits to the bone, and unemployment at 8.6 per cent remains one of the country's biggest problems.
Resource stocks are among the most important. Minerals account for more than 9 per cent of GDP and Australia leads the world in the export of coal, iron, gold, bauxite and copper. Of the 1,100 companies quoted on the Sydney stock exchange, the largest include National Bank of Australia and News Corporation, Rupert Murdoch's media conglomerate.
Successful new issues this year have included Qantas, the state airline that is 25 per cent owned by British Airways, and Commonwealth Bank of Australia, although their flotations have not prevented the whole market, with a capitalisation of pounds 151bn, from showing only modest sterling returns of around 7 per cent over the past 12 months.
For smaller stocks, Hugh Young, fund manager for Abtrust, cites Leighton, a construction firm which has done work on Hong Kong's new airport, as one to watch. BRL Hardy, which produces wine for Sainsbury's, and whose Nottage Hill label can be sampled on British Rail, is also on the "Buy" list.
Forthcoming new issues include the state-owned telecommunication groups Telstra and Optus Communications; both should help to correct the Australian market's bias towards resources and manufacturing stocks. The flotation of the Sydney Olympic Stadium, currently being built for the games in 2000, should also fuel interest among private investors.
Austria: While Austria remains one of Europe's richest countries, all is not as it should be on the economic front. The strength of the currency - the schilling - has done severe damage to a tourist industry which accounts for 14 per cent of GDP, and has not helped the country's electrical engineering, steel and wood-processing sectors. Despite these industries being among the world's most advanced, a sluggish economy in Germany - by far Austria's largest export market - has put a big dent in the national income.
In the early part of the decade, international investors poured money into Austria. The optimism was overdone, however, and the market is still in the process of shedding the excess premium those investors attributed to it. As a result, its equity market has proved to be one of the worst performing this year, with the 130 companies listed on the Vienna stock exchange showing negative returns of -5.6 per cent.
The forthcoming flotations of Creditanstalt, Austria's biggest bank, and KTM, the motorcycle manufacturer whose bikes this year won the World Motocross championship, appear to be generating some excitement. Judicious stockpicking, however, remains criticaln
Performance statistics : Datastream
There are no UK-listed Argentine-specific funds, but many investment and unit trusts offer exposure to Latin America as a whole.
UK-listed funds investing solely in Australia include Ingot Capital's Australian Opportunities investment trust, and Friends Provident's Australian unit trust.
Most European-sector funds are leaving Austria well alone for the moment, although some retain a small exposure.Reuse content