While opportunities for short-term gains will appear in the tech sector, odds still favour investing in old economy stocks.

With the summer holidays finished, the return back to schools, offices and factories reached full swing this week. After the dismal holiday weather summer sunshine has made several appearances in recent weeks.

This somewhat better spell of weather coincided with better conditions in global stock markets and most equity indices managed to rise over the course of the month. But just like the weather the pattern of improvement has been erratic, with most equity indices falling back in the last week of the month.

September has got off to a somewhat hesitant start and the stock market historians have been quick to point out that September is typically the worst month of the year for equity prices.

Whether September 2002 bears out this historical seasonal pattern remains to be seen.

However, for equity investors even a further modest recovery in the overall equity market indices would generate ongoing stock-specific investment opportunities.

The accompanying table lists the performance of the top 10 companies in the Irish market during August and also shows each company's year-to-date return.

Over the month the ISEQ-Overall Index rose by 7 per cent, which compares with rises of 11 per cent to 57 per cent for these top 10 performers.

The Northern Ireland pharmaceutical company, Galen Holdings, rose by 56.8 per cent during August as it recovered from a very oversold position. Somewhat unfairly some of this year's decline in Galen's share price was probably due to the spillover effect from the disastrous decline in Elan's share price.

Despite this sharp August bounce, Galen's share price has still fallen by 40 per cent so far this year.

However, this still compares very favourably with Elan, which also enjoyed an improvement in fortunes during August partly on the back of takeover rumours.

Nevertheless, the rise of about one-third in Elan's share price barely makes a dent in its decline of 95 per cent over the year-to-date.

It is notable that three of the top 10 performing shares in August are companies that are recovering from very sharp prior share price falls.

As well as the two pharmaceutical companies, technology company Trintech also enjoyed something of a revival in August. Despite this recovery of 11 per cent Trintech's shares are still down 80.9 per cent so far this year.

The fact that at least some shares in the hard-hit technology and pharmaceutical sectors seem to be establishing a floor is good news for the overall market.

It provides at least some support for the view that there is now quite limited downside risk to current share prices in those sectors such as technology that were hit hardest over the course of the bear market.

Despite the glimmering of recovery in these sectors, seven of these top 10 August performers are companies from the traditional sectors such as banking, food and building.

There are three food companies in the list - Kerry Group, Fyffes and Glanbia. As well as enjoying strong price rises in August all of these companies have had a very good 2002.

In the eight months to the end of August Glanbia has risen by 37.5 per cent, while Fyffes and Kerry have risen by 13.8 per cent and 12.5 per cent respectively.

In the financial sector AIB continued to recover from the Rusnak debacle with a strong rise of 16.6 per cent in August.

It was the only financial to make the top 10 in August although Bank of Ireland was only just outside the top 10 with a rise of 10.7 per cent during the month.

Therefore, with the two largest financial stocks rising by over 10 per cent, the ISEQ was up by 11.9 per cent over August to reinforce even further the strong out-performance by financial stocks in 2002

The housebuilder, McInerney, had another strong rise in August, enabling it to retain its position as the best performing stock on the Irish Stock Exchange this year.

The retailer Arnotts was not far behind and it is in fact the second-best performing stock this year with a rise to end-August of 56.5 per cent.

The pattern of sector relative performance in the Irish market broadly mirrors international trends.

Defensive or "old economy" stocks have been doing much better than the "new economy" shares.

Despite the signs of life from some companies in the technology and telecom sectors, it remains the case that the older and longer established companies are the ones that are delivering rising dividends and share prices to their investors.

Therefore, while some opportunities for short-term gains will appear from time to time in the technology sector, the odds still favour those investors who are putting their money to work in the shares of companies that are producing basic goods such as foodstuffs and delivering essential services such as retailing.