TECHNO-STOCK bears are predicting the crash of the past 10 days is about to enter a new and more bloody phase. The good news is Hong Kong investors do not need to worry too much, unless they have stocks in the sector. Analysts say knock-on falls in Hong Kong stocks, in the wake of the techno-stock crash, will be short-lived and should provide a window for bottom-fishing. The rise of North American technology stocks has been impressive, with key stocks doubling and tripling in value over the past 12 months. Confidence in the sector has been rocked as inflated expectations of earnings for the second half become more realistic. Many stocks have plummeted, with losses in excess of 30 per cent in many cases, and indexes following the sector have turned from stellar top-performers to nasty under-performers. The charts suggest that the techno-crash is due to continue in earnest. The short-term impact on more mainstream sectors of equity markets is likely to be bad. The essence of techno-investing has permeated almost every corner of the global investment community. Toppling techno-stocks will hit sentiment and pull down the Dow Jones industrial average and the Hang Seng Index. But this is only likely to be a short-term phenomenon, especially for the Hang Seng Index. Any weakness should be used by long-term investors as an opportunity to accumulate. Crashes, by their nature, ought not to be predictable. In the past they have driven into gains like a financial typhoon disturbing all in its path and leaving devastation and destruction in its wake. The Wall Street crashes of 1929 and 1987 are the biggest examples. The rise of techno-stocks has been boosted by huge sales of personal computers. Estimates suggest sales will be up 25 per cent on the US$116 billion achieved last year. Enthusiasm for the sector turned into a mass delusion, a kind of national preoccupation verging on illness. The listing of NetsCape Communications, in the summer, was an example of hope overcoming sober judgment. NetsCape effectively had no earnings and no profit record, with little potential of profits coming for two years. Yet in debut trading it posted the fourth biggest first-day gain, of 108 per cent, in an initial public offering in United States history. Since listing, the stock has managed to keep above the red line, with a return of about five per cent. Fears have been expressed about the extent and magnitude of the techno-bull frenzy all summer. In the October issue of Fortune Magazine, Barton Biggs made his fears quite plain. The global-markets strategist at Morgan Stanley said: 'Never before has there been a bull market with such a broad participation. This is not a good sign. 'God forbid what happens when the chickens come home to roost.' Roosting season appears to have started. The indexes tracking technology stocks are experiencing unprecedented volatility, a sure sign of fragmenting sentiment ahead of a nasty correction. Fund manager Arthur Bonnell, of Bonnell Growth Fund, told the Bloomberg news service in Boston on Tuesday: 'If you are one who likes to watch things minute-by-minute, you have to be going crazy right now about what is happening to technology stocks.' One set of mainstream investors who will be looking at the ducking and diving going on in the techno-stocks with some trepidation are mutual funds. Bloomberg reported overnight on Tuesday the biggest mutual fund in the world, Fidelity Investments' Magellan Fund, fell more than 2.5 per cent during the day. The $53 billion fund has trimmed its holdings in technology but the exposure is historically huge at 41 per cent of the portfolio. This was down from 44 per cent on July 1. All the constituents in the 16-stock Philadelphia Stock Exchange semiconductor index are off their highs. In the Pacific High Technology stock index of 100 stocks, in the last month one is unchanged, 18 have modest gains of less than 10 per cent and the share prices of the remaining 81 have got nose bleeds.