It's that time of year again when investment professionals consider the outlook for stock markets around the globe and where best to invest the cash entrusted to them by clients.

In recent days, stockbrokers and fund managers have been planning investment strategies, releasing forecasts for the year ahead and identifying favourite sectors and stocks and some common themes are emerging.

Despite their wobbly start to the year, technology and telecom stocks look set to remain popular, European equities will also remain to the fore while the Irish stock market is generally expected to have a less torrid time than in 1999.

According to Goodbody Stockbrokers, there has been a marked divergence in recent years between value strategies, where investors seek out lowly-valued companies as measured by criteria such as price/earnings ratios and dividend yields, and growth strategies where they focus on companies with high growth characteristics, often in the hightech area.

Most market observers believe this trend is set to continue with growth, and especially high-tech, investments delivering significantly higher returns. But careful value stock selection may also yield rewards.

"While there is no strong rationale to justify a substantial rotation back toward value stocks in the near future, at the same time the poor performance of value-type investments cannot continue indefinitely," Goodbody Stockbrokers said in a recent note to private clients.

Among the international stocks it believes offer value are Great Universal Stores, Berkshire Hathaway, the investment vehicle of legendary investor Warren Buffett, and Associated British Foods.

Meanwhile, many analysts believe Europe rather than the US may be the place to be in the year ahead. Friends First, one of the State's leading fund managers, remains enthusiastic about European shares. The company believes that valuations are attractive relative to the US and Asia while increasing deregulation, liberalisation and privatisation should continue to help foster the growth of an equity culture, further lending support to share prices in the region.

In this regard, the recent proposal by the German government to abolish tax on profits made from the sale of cross-share-holdings by companies is significant.

Friends First also believes there is considerable potential for improvements in the profitability of European shares while corporate restructuring, in the form of mergers and acquisitions activity, is also behind that in the US.

"The US is in its ninth year of expansion whereas Europe is only at the start of a cyclical pickup," says Ms Grainne Alexander, director in charge of European equities at Friends First.

Among the sectors favoured by Friends First are telecoms equipment shares such as the Finnish group Nokia and Swedish firm Ericsson; telecoms provision where it likes the look of players such as KPN and France Telecom; and semi-conductors where it is focusing on firms such as Philips and Siemens.

At home, most analysts expect the Irish equity market to have a better year than in 1999 when it significantly under-performed most other European equity markets, returning just 0.4 per cent compared to nearly 18 per cent by London's FTSE 100, 19.5 per cent by the US Standard & Poor 500 and 39 per cent by Germany's DAX index.

Although local fund managers are expected to continue to shift money out of the Irish market, this should not be as pronounced as last year and should be aided by cash inflows and the money released by the sale of firms such as Hibernian, Esat and Clondalkin. Also, unlike last year, the market will not face a huge public offering of the scale of Eircom with the Aer Lingus flotation expected to be on a far smaller scale.

"Looking ahead, we are convinced that a number of the issues that have dogged the Irish market over the past year will be overcome," NCB says. "Overheating fears will prove exaggerated and the financial sector is expected to recover some lost ground as current interest rate fears across Europe and the US prove excessive."

Several market observers - including those at Goodbody, NCB and Hibernian Investment Managers - are expecting the ISEQ index to hit 6,000 this year, implying growth of 20 per cent from its current levels just above 5,000 while BCP Stockbrokers has set a target of 5,500.

Not all are as optimistic, however. Ulster Bank Investment Managers (UBIM) believes that in the absence of a major event, such as a major corporate takeover which would draw attention to the value offered by the market, Irish shares will simply move sideways and end the year flat.

Which Irish stocks will perform best is another question but many analysts believe it could be a tale of two halves - with cyclical shares maintaining last year's momentum in the first half while financials may come into their own later in the year.

NCB remains keen on the likes of Smurfit and CRH given their exposure to the strong global recovery and the prospect of firmer prices.

However, crucial to the fortunes of the ISEQ will be the financial sector with the top three stocks - AIB, Bank of Ireland and Irish Life & Permanent - accounting for more than a third of the index. But analysts see little prospect of a recovery in financial shares until the recent volatility in bond markets settles.

Second-line stocks are likely to continue to struggle to attract investor interest with many brokers urging private investors to stick with the larger stocks, or those with a market capitalisation of €1 billion or more.

Among those recommending frontline stocks is BCP Stockbrokers, on the basis that "these stocks will be the first to recover when international investors return to the Irish market".

It highlights AIB, which it says is trading at a significant discount to its European peers, and Bank of Ireland, which BCP believes remains undervalued. It also recommends Eircom, CRH, Kerry, Ryanair and Iona due to their low valuations and strong growth potential.

Others agree that there is great value to be found among Irish financials in particular and that they cannot languish forever.

"My advice is to put away Bank of Ireland under €7.50 or AIB at €10.00. They are ridiculous prices for those two companies," says one fund manager.