(FORTUNE Magazine) – As millions of American tourists take Europe by storm, a growing number of ! American investors are starting to turn away from European stock markets. Until recently these countries' stocks were cheap when purchased with powerful dollars. But most European stock markets have been on the move for the past year or so, and American investors got an extra lift when European currencies began to rise against the dollar. Better pickings, security analysts say, can be found these days in Far Eastern countries, most of whose economies have been growing much faster than Europe's. (For more on the opportunities in investing outside the U.S., see the International 500.) ''The equity markets of East Asia,'' says Nicholas Bratt, a managing director at the investment advisory firm Scudder Stevens & Clark, ''provide the most attractive investment prospects of any in the world over the medium and long term.'' The dollar hasn't tumbled out East. The Japanese yen has gained only 4% against the dollar since March, Wall Streeters note, and Australia's currency has actually become cheaper for Yanks. Currency plays aside, analysts see plenty of genuine bargains in the Far East. Some of their favorite stocks are in Hong Kong, whose currency is pegged to the U.S. dollar.

Investing in all three countries is easy if done through American Depositary Receipts (ADRs). Instead of buying stock, Americans can buy ADRs issued by banks that hold the shares. All the stocks below are quoted at their ADR prices in the U.S. Two of Asia's most sizzling economies, alas, are off- limits to Americans seeking to buy into individual companies. The only recourse for those hankering to invest in South Korea and Taiwan is to buy mutual funds permitted to own shares there. While Japanese stock prices have broken records recently, the main action has been in domestic construction and real estate companies. Some of Japan's biggest industrial names have been sitting out the bull market. ''Japanese brokers haven't recommended those stocks in the past year because of fears about U.S. protectionism,'' explains Lawrence Stevens, an economist at the New York office of Vickers da Costa Group, a London-based securities firm. As a result, Honda Motor, No. 41 on FORTUNE's latest list of the 500 leading foreign industrial companies, long languished at a low price-earnings multiple. Honda, it's believed, makes virtually all its profits in North America. In the past few weeks savvy investors, recognizing that Honda was undervalued, have been snapping up its shares. Honda recently hit an all-time high, but its P/E was still only 10, vs. 25 for the Japanese market as a whole. Maryann Keller, portfolio manager and auto analyst with the New York money management firm Vilas-Fischer Associates, thinks the stock could go as high as $74 within the next year. Japanese investors have been cold-shouldering Hitachi, the electrical equipment giant that's one of the world's largest manufacturers of semiconductors, until the worldwide chip glut has abated. Bratt of Scudder Stevens urges Americans to take advantage of the low price: ''The share prices of Japanese companies in consumer electronics, telecommunications, and computers have been declining for nearly two years and now represent outstanding values.'' The big story coming out of Australia is financial deregulation. Foreign banks have just been permitted into the country, and Australian banks have been allowed to expand into the brokerage industry. Gary Motyl, a portfolio manager for the Templeton group of mutual funds, has been talking up two of Australia's three largest banks -- Australia & New Zealand Banking and Westpac. Neither has many Third World loans. Australia & New Zealand is off to a slow start in fiscal 1985. Partly because of costs associated with an acquisition, profits were up only 3% in the first six months of its current fiscal year. But Motyl expects healthy earnings growth in the long run. Westpac is also expanding aggressively, but has had an excellent year so far; earnings for the six months through March were 29% ahead of the same period last year. Kevin Crotty of the New York office of Potter Partners, an Australian brokerage firm, attributes the results to superior cost controls. Potter looks for a 23% increase in profits in fiscal 1985. Outside banking, the analysts' Australian favorite is Dunlop Olympic. Investors sometimes confuse the company, a diversified manufacturer of tires, electric cable, sporting goods, and other wares, with a faltering but unconnected British tire company bearing the Dunlop name. Potter Partners is projecting a 19% rise in profits this fiscal year. Hong Kong has been a raging bull market since the British and Chinese governments came to terms on the future of the British Crown Colony. It's to keep its present economic system for at least 50 years after it reverts to Chinese control in 1997. The stock index has shot up 126%, and analysts expect it to climb another 50% or so in two years. One worry is that exports to the U.S., the colony's biggest customer, were down more than 10% in the first half of this year. Accordingly, analysts recommend companies that derive little or no earnings from the U.S. China Light & Power, says Edward Lemond of the Hong Kong investment firm W.I. Carr, is one of the safest bets. The reason, he explains, is that the government guarantees the electric utility a generous rate of return on capital. Malcolm Bone of the New York office of Robert Fleming, a British investment firm, recommends Hutchison Whampoa Ltd., a real estate, shipping, and retailing conglomerate. A surprising number of analysts recommend Hong Kong Land, even though it's selling at a price-earnings multiple of 41.8. It's controlled by Jardine Matheson & Co., a conglomerate going through difficult times, and has a big new office complex that's nearly 50% vacant. Jeffrey Herwood of Vickers da Costa is confident that Hong Kong Land, which owns much of the high-grade commercial real estate in the Central District, the colony's business core, will prosper mightily if the economic expansion continues. He expects the stock to rise 85% over the next 16 months.

CHART: COMPANY NET REVENUES STOCK PRICE RECENT Fiscal year-end INCOME in millions RANGE PRICE in millions since January P/E 1984 1 multiple 2 Hitachi $860.4 $20,525 $22.50-$44.125 $30.50 March 31, 1985 10.3 Honda Motor $532.1 $10,973 $41.50-$63.75 $62.75 February 28, 1985 9.9 Westpac Banking $285.2 N.A. $2.80-$4.0 $83.30 September 30, 198 44.5 Hutchison Whampoa $130.9 $667 $5.25-$17.375 $17.25 December 31, 1984 15.0 China Light & Power $127.4 $819 $.95-$2.15 $2.08 September 30, 198 49.9 Australia & New $109.4 N.A. $3.35-$3.68 $3.49 Zealand 6.4 Banking September 30, 1984 Dunlop Olympic $55.6 $1,363 $1.17-$1.78 $1.78 June 30, 1984 7.44 Hong Kong Land $45.3 $1,310 $.25-$1.67 $1.67 December 31, 1984 41.8 1Source: Vickers da Costa. 2Based on earnings for the past four quarters.