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The land of the rising sun and the sinking stock market. That's been the image of Japan in 1990.

It's true that a large chunk of the record plummet of the Nikkei Index earlier this year has since been made back. Some experts believe this industrious comeback will continue. However, any investor this time around must first bid sayonara to the belief that Japan, its government, its economy and its financial markets are infallible, as was once thought.The Japanese have no reason to hold a superiority complex anymore. They've been proven human just like the rest of us and their stock market is a hard sell right now. The returns from stock funds investing in Japanese stocks have been downright pitiful.

"The main positive for the Japanese market lately has been bargain hunting by individual and institutional investors," explained Peter Davies, an international equities analyst based in New York with Japan's Nomura Securities. "But, in terms of fundamentals, the yen remains weak relative to the dollar, oil prices are higher and Japanese interest rates have been on an up trend."

Because popular international stock funds that banked heavily on Japan in the past were hammered by its decline, many have scaled back their dependence on Japan in favor of the stocks of other nations in the Pacific Basin.

"Taking our fund's portfolio from 50 percent Japanese down to about 10 percent as we did, is, for a Pacific Basin fund, basically getting out of the market," said Wesley Wadman, portfolio manager for the IDS Strategy Pan Pacific Growth Fund, up a scant 2.5 percent this year. "Approach the Japanese market with extreme caution, making strategic `rifle shot' bets on specific companies rather than the overall market."

There are plenty of strong Japanese companies to choose from, though their diversity and the added complication of foreign exchange probably means that an investor should bank on the expertise of a seasoned fund manager.

Wadman's favorite Japanese stocks currently include electronics firms such as NEC Corp., Hitachi, Sony Corp. and Sharp Corp., as well as ceramic manufacturer Kyocera. Meanwhile, Davies' favorites include Nintendo, Honshu Paper and Ahimizu Construction.

"The Japanese market is going to be a hard place to make money for the next year," predicted Christian Wignall, senior investment officer for GT Capital Management, whose GT Pacific Growth Fund is up 1.2 percent and GT Japan Growth Fund is down 1.9 percent. "Japan is a stock-picking game right now, and making money in the Pacific region will no longer be the easy game it was over the past three or four years."

One of Wignall's favorite holdings is Yagi Antenna, a small company that makes part of the equipment for establishing cellular telephone networks. He also holds Hitachi, Koksai Electric and Kyocera.

Investors don't like to get burned twice, and neither do stock fund managers. So no one's talking big about Japan's opportunities right now. Certainly the country does have wonderful long-term potential, but the near-term still looks glum.

"While the rumblings in the U.S. are that Japan has taken its medicine and is ready to gear up again, I haven't seen many fund managers get their feet wet to any great extent," said Lori Lucas, senior analyst for the Chicago-based Mutual Fund Values investment advisory. "I still see Japanese stocks dramatically underweighted in the funds that are permitted to underweight them."

The top-performing stock funds investing heavily in Japan in 1990, according to Mutual Fund Values, haven't performed all that well:

IDS Strategy Pan Pacific Growth Fund, IDS Financial Services, Minneapolis; $47 million in assets; graduated sales charge upon redemption of shares during the first six years; $2,000 minimum purchase; up 2.5 percent.

GT Pacific Growth Fund, GT Capital Management, San Francisco; $260 million assets; 4.75 percent "load" (initial sales charge); $500 minimum; up 1.2 percent.

GT Japan Growth; GT Capital Management; $91 million; 4.75 percent load; $500 minimum; down 1.9 percent.

The Japan Fund Inc., Scudder Fund Distributor Inc., Boston; $374 million assets; no load; $1,000 minimum; down 5 percent.

John Hancock World Pacific Basin Portfolio, Boston; $5 million assets; 4.5 percent load; $1,000 minimum; down 6 percent.