America resists the 'Asian virus'

For most of the last two years British investment managers thought Wall Street was heading for a fall, that US shares were way over-valued, and that any rerun of the October 1987 crash would start on Wall Street.

But it was Hong Kong that infected the rest of the world with the Asian virus. And, in the early stages anyway, Wall Street has put up more resistance than any other stock market.

Eleven days after Hong Kong's "Red Friday" on 17 October, the Dow Jones Industrial index was down 4 per cent. By contrast, the FT-SE 100 index in London was down nearly 10 per cent, and Tokyo's Nikkei 7 per cent. Hong Kong's Hang Seng lost a third of its value.

"Wall Street is providing stability for global markets," says Rupert Brandt, Foreign & Colonial fund manager. "If it succumbs, markets round the world will be worse than they are."

Some fund managers, though, fear Wall Street may prove less robust over a longer run, among them Alan Torrey, who runs Prolific American Opportunities. "Americans tend not to notice international events until they take a pasting," he warns. But he believes smaller US companies are well-placed to outperform heavy-weights.

Others suggest that a correction could be healthy in forestalling interest rate rises that could threaten the bull run.

Is this the time to buy on Wall Street? Few would unhesitatingly say yes - it makes sense to wait for the dust to settle.

Most Brits opt for unit trusts, and there are 124 specialising in North America. The best performer over the year has been M&G American Recovery. It turned a pounds 1,000 investment into pounds 1,510 over 12 months, and almost doubled investors' money over three years. Greg Kerr, its manager, is convinced that the suddenly volatile stock market will throw up buying chances.

There are far fewer American investment trusts. The most successful over one, three and five years has been JO Hambro's North Atlantic Smaller Companies Investment Trust. Christopher Mills, its manager, feels the recent volatility will not dent its record.