"Investors will think twice about investing in the UK," said Miren Etcheverry, co-manager of the John Hancock International Equity Fund in Boston, which invests about 55 per cent of its $34bn (pounds 21bn) outside the US. "Short- term attention will be on euro countries first, Europe second and the UK third."
"I strongly favour continental Europe over the UK," said Ron Chapman, head of international equities at the Dreyfus Global Growth Fund. Of the $100m Dreyfus has invested internationally, $45m is in continental Europe and about $8m in Britain.
Already, gains in Europe's big stock indices have so far this year outpaced Britain's FT-SE 100, which typically serves as the region's benchmark. The FT-SE 100 has gained about 15 per cent compared with gains of 40 per cent in Italy's MIB30, Europe's most profitable market this year.
The UK has also lagged behind a 34 per cent rise in French stocks, a 36 per cent increase in Spain and gains of more than 27 per cent in the benchmark indices of Germany, Belgium and the Netherlands.
These markets have risen on accelerating corporate profits, coupled with falling interest rates, as countries battle to get their economies in shape to qualify for the single currency. Stocks are also getting a further boost from mergers and acquisitions, such the recent agreement by Germany's Daimler-Benz to buy Chrysler, the third-largest US car manufacturer.
The creation of global companies is alerting US investors to the benefits the euro can bring in Europe. Confidence has also been boosted by the success of Europe's political leaders in allaying concerns that the euro would be a weak currency.
The abolition of national currencies is also expected to make it easier for companies to sell products and services to their European neighbours, driving prices down to the lowest levels prevailing in the region. Buyers will be able to purchase from any company offering the best deal without having to worry that currency shifts will undermine cross-border transactions.
Because the UK Government, concerned that the British will not be willing to exchange pounds for euros, has said it will not consider joining EMU until mid-2002, UK companies will miss out on those benefits.
"I believe the future course of the UK economy will be damaged if they don't become a part of EMU," said Mr Chapman. He added that even if Britain joined at a later date, it would always remain "a weak member".
"Imagine if some of your friends were taking on a new risky endeavour and a couple of years later you want to join on the same terms," said Mr Chapman. "I mean, who took the risk?"