Investors in Indonesian mutual funds enjoyed an average 34% return last year, closely followed by those in India and the Philippines, who saw an average 27% increase, according to Lipper.

In 2005, however, analysts expect Indonesian returns to fall behind those in the Philippines and India, as corporate earnings in these two countries continue to grow due to improved economic performance.

The victory of new Indonesian President Susilo Bambang Yudhoyono in the country's first direct presidential elections last year does not offer many promises, analysts say. Still, Indonesia outperformed its stock market peers in Asia in 2004 when the Jakarta stock exchange's main index surged 44.6%.

Even though Asian stock markets saw a second consecutive year of strong growth, with the MSCI Asia-Pacific ex-Japan index rising 19% to a near five-year high, markets in Thailand and China pitched in poor performances.

Thailand funds returned a minus 1.7% on average, the only negative average fund performance among the 15 Asian geographic sectors tracked by Lipper. China and Greater China funds returned 3.9% and 6.8%, respectively. Lipper data suggests that the two countries gave the lowest average returns in the region.

The Chinese economy, in spite of growing at a rapid 9.5% last year, is unlikely to see superior stock market gains because of regulatory risks, dominance of state-run companies and fear of overcapacity in certain sectors.

This year, analysts are rooting for India, which has more privatized, listed companies than does China. In 2004, overseas portfolio investors poured in a record $8.5 billion into the Indian stock market, boosting the index to a then life high of 56.5% above a mid-year low, which was caused by the surprise election of a communist-backed government.

Another market that finds favor with analysts in 2005 is Taiwan, whose mutual fund industry returned a modest 7.4% last year. Analysts say that better relations with China and stricter accounting rules should make Taiwanese stocks more attractive this year.

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