"Maybe American funds will stay put out of patriotism but our sense is, outside the U.S., people may shift funds into other markets that have fallen quite a bit relative to the U.S. market," said Ong Nai Pew, director at APS Asset Management.

     Major U.S. stock markets sank to levels not seen since mid-October 1998 after reopening on Monday for the first time since the attacks in New York and Washington.

     The Dow Jones industrial average <.DJI> plunged 7.13 percent and the Nasdaq Composite Index <.IXIC> sank 6.83 percent.

     Singapore is one of the top Asian investors in U.S. equity markets, possibly only after Japan, with the bulk of investments made by the Government of Singapore Investment Corp (GIC).

     The government investment agency manages some US$100 billion of the city state's funds and is one of Asia's biggest investors, but its investments and performance are closely guarded secrets.

     Fund managers said the main concern at the moment was the great uncertainty over the prospects of U.S. retaliation and an escalating conflict.

     "There is no sustained trend I can see at the moment but there shouldn't be encouragement to switch to the U.S.," said Cher Hung Jin, chief investment officer at Daiwa SB Investment Singapore, dismissing some arguments that it could be time to enter the U.S. market after Monday's plunge.

     Michael Lim, regional director at Prudential Portfolio Managers Asia, which manages US$16 billion, said investors faced the dilemma of where to put their money rather than picking a particular stock market.

     "The decision will be made between equities, fixed income or cash for that matter. That is the big question," he said.

     Saudi exile Osama bin Laden, who stays in Afghanistan as a guest of the ruling Taliban movement, has been named by Washington as the prime suspect in last week's attacks that hit the world's financial heart and killed thousands.

     On Monday, U.S. President George Bush said bin Laden was wanted "dead or alive" and told Americans to be prepared for casualties in the war to punish the attackers.

     A Taliban cleric on Tuesday announced a jihad, or holy war, against the United States if it attacked Afghanistan.

     Ong of APS, which manages US$200 million in mostly Asian assets, suggested institutional investors look to markets outside the United States and saw chances of additional fund flows into the Asia-Pacific region in the fourth quarter.

     "Asia has come down a lot more and earlier than Europe and the U.S., so there may be more downside risks in other markets than in Asia," Ong said.

     "I think we will see interest in domestic stocks, for instance banking stocks in Thailand or consumer stocks in India or China. Those tend to be safer in the coming months."