ASIA LOOKS YUMMY BUT MOST JUST PICK: MERRILL LYNCH SURVEY FINDS FEW MANAGERS PUTTING MORE MONEY IN RAVAGED REGION

Money managers may be optimistic about the outlook for Asia over the next year, but few appear to be prepared to put their money where their mouth is — at least for the moment.

The latest Merrill Lynch Fund Manager survey released last month showed that while U.S. fund managers have less in Japan and other Asian markets than their index — the Morgan Stanley Capital International Europe Australasia Far East index — more than half of the 44 institutions canvassed say Asia is their favorite emerging market region over the next 12 months.

The majority are still sitting on the sidelines, waiting and watching — not surprising considering last year’s Asian currency crisis which triggered a severe regional economic decline and a spate of Japanese bank liquidations. Indonesia’s stock market plummeted more than 90% last year from its 1997 high. But a few brave souls are putting more in Asia.

“We are investing in Asia and are moving towards an overweight position in the region compared to the MSCI,” says Gary Greenberg, chief international investment officer of New York-based Van Eck Associates. “Most investors have already factored the economic recoveries starting to take place into their valuations, and the focus is now clearly on corporate restructuring.”

Van Eck’s three Asia funds have a combined $100 million.

Mr. Greenberg says he’s expecting corporate restructuring to pay off in fatter profits.

Among the companies poised to benefit: Housing and Commercial Bank in Korea.

Mr. Greenberg says Indian software shares are also currently attractive, with many companies offering potential earnings growth of more than 100% as they gain huge amounts of business in Europe and the United States.

“Electronic commerce groups Satyam Computer Services and Infosys Technologies Ltd., which is set to become the first Indian company with an ADR listing this week, offer value at their current levels, as does Niit Ltd., which has established computer schools throughout India and in Asia,” he says.

At Wanger Asset Management LP, Marcel Houtzager, a principal of the Chicago firm who manages about $200 million in foreign investments, says he invests in small and midsize companies that have high quality franchises and good prospects.

“But there are a disproportionately high number of these in Europe and rather few in Japan,” he says. “We look for those companies that are run for the benefit of shareholders rather than controlled by a family or financial institution, and there are not that many in Japan. The equities we do hold tend to be those of Japanese companies run or owned by foreigners.”

Among these are the U.S.-owned Japanese cosmetic group Nu Skin Enterprises Inc. and Softbank Corp., run by its Korean-Japanese founder. Softbank owns a third of Yahoo! Inc. and holds stakes in a range of Internet providers in Japan.

“Most investors are unaware that more than 50% of all Internet traffic in Japan finds its way through Softbank-owned websites,” Mr. Houtzager says. “As such, the shares trade at a huge discount to net asset value.”

Wanger also is upbeat about emerging Asia, and is still investing in Hong Kong, Singapore and Taiwan.The growing trend among large companies to outsource some of their manufacturing operations has made such vendors quite attractive, particularly Natsteel Electronics Ltd. in Singapore, Celestica Inc.in Canada and Solectron Corp. in the U.S.

But Mr. Houtzager really likes some European small caps.

“You can buy shares in first-rate companies, which are growing profits at more than 10% a year, for under 10 times their earnings.”

His favorites: Dutch window treatment maker Hunter Douglas NV and British business travel services group Hogg Robinson PLC.