Global opportunities for choosy investors. MARKETWATCH

Japan was supposed to be the villain. Before the American stock market collapsed in October, many analysts and portfolio strategists expected the Japanese market, where stocks were trading as high as 80 times their values, to lead the world markets down the drain. So the Dow Jones industrial average's 508-point plunge Oct. 19 caused more than one surprise. As the markets continue to shake out, investors are looking for havens and opportunities.

Last week, the Dow closed down 143.74 points to 1,766.74, as doubts about the dollar and the federal budget deficit package dogged the markets, along with gloomy retail figures. Even an interest rate cut Thursday, led by West Germany and followed by six other European central banks, did not calm the markets.

Opportunities for investment worldwide abound, if one separates a country's economy from its market, says Ian Wiener, a portfolio manager at Clemente Capital in New York. ``But for an investor, it's going to be tough for a while,'' he observes.

Some of the frequently mentioned, post-collapse strong performers include Australia, Britain, Hong Kong, and Japan.

``All markets are down,'' says Christopher Curwen, vice-president of international equities at Hoave Govett Inc., New York. ``The whole world is shivering, because of America's twin deficits.''

But America suffers more from the trade deficit than the budget deficit, Mr. Curwen adds, because the trade figures put so much pressure on the dollar. Last week, the dollar fell to record lows against the Japanese yen and the West German mark.

Mr. Wiener assesses the Japanese and British economies as good; continental Europe as uncertain, because of the falling dollar; and the United States as uncertain.

``Japan has been the best performer in the market and economy,'' he says. ``The surprising thing is that the crisis started in the US, when it was expected in Japan.''

Maureen White, an international equity analyst at First Boston in New York, says the strength of Japan's domestic economy is impressive: ``It might not be unwise to have 40 percent or 50 percent of an international or non-US portfolio in Japanese domestic-demand stocks.''

Ms. White says, however, she would be fully invested in cash and bonds, until the plunge's effects are understood and consumer spending gives signs of sustaining growth.

Curwen prefers to invest in Australian commodities, which have gone down too far, he says, and Hong Kong, which has a 1987 growth rate of 12 percent. He expects this figure to stay in double digits next year. ``There will continue to be good domestic growth, because there are cheap values, but it's a volatile market,'' he cautions. He also likes Britain, where balance sheets are strong and companies are oversold.

Looking at Australia, Wiener of Clemente Capital likes mining companies. In Japan, he favors the blue chips and domestic business stocks, like construction, and fixed-income securities. He also finds value in the US, in late-business-cycle ``rust belts,'' like steel and machinery manufacturing, which are competitive because of the dollar's fall.

For November, Australia had the best-performing market, according to Mark Sladkus, a vice-president at Morgan Stanley & Co. in New York. It climbed 9.6 percent, while in October it was the worst per-former, declining 44.7 percent.

The year's best market performer is Japan, up 40.6 percent through November. Japan also had the best performance in October, down 7.5 percent, followed by Denmark, which fell 7.7 percent, Mr. Sladkus says. In contrast, the US declined 21.5 percent.

Japan is the leader in world market capitalization; as of Nov. 30, it reached $2.8 trillion. The US market has $2.07 trillion.

Five years ago the US accounted for 60 percent of the world's market capitalization, while today it accounts for 31 percent. ``The decline results from the relative underperformance of the US markets and the strong change in the currency relationships,'' Sladkus explains.

In the last couple of weeks commodity prices have surged, he notes, which has been a surprise to the markets, given conventional thinking about a recession.

``Before the collapse, there were fears of inflation. Since the crash, some think a recession may come. In a recession, commodities won't rally, so there is less demand,'' he explains. ``That's why the rally is surprising.''

The markets experiencing some of the greatest falls included the commodity-producing countries of Australia, Canada, and Malaysia. ``And Malaysia did not rebound in November, and Canada was down,'' Sladkus adds. ``It's fair to say that we're not sure what the market outlook is; we'll wait and see.''

Some analysts feel pessimistic about Europe's market outlook and are somewhat bullish about Asia, excluding Japan. ``The question arises: How long can Japan go on?'' he says.