Economies perceived to be better prepared, such as Hong Kong and Singapore, stand most to gain, Sean Debow, head of regional valuation and accounting research told Reuters in an interview.

"Clearly, funds are moving out of Indonesia, India, Thailand and China on account of Y2K," the millennium bug expert said.

"Money that is Asia-specific, and that is a large portion of funds that is invested in Asia -- we believe that money has already started to move to Singapore and Hong Kong."

Apart from a strong driving force to avoid risks, Debow said the reallocation of particularly US-based funds was also due to the US Employee Retirement Income Security Act, whose high standards placed restrictions on large investors holding Asian stocks with high millennium risk exposure.

The Y2K bug stems from an old programming practice of using only two digits to denote the year. Older computers could mistake 2000 for 1900 and crash at the start of the new year.

Debow fears Y2K preparations in Taiwan might be disrupted with the rechanelling of energies to rebuild the island in the aftermath of a major earthquake in September that killed more than 2,300 and toppled 52,000 buildings.

Taiwanese involved in logistics, transportation, distribution and other crucial work, who would otherwise be involved in Y2K tests and contingency planning, were now too preoccupied with picking up the pieces after the quake, he said.

"That's going to, in relative terms, hurt Taiwan from their level of preparation. They are going to have less time for example to do tests, less time to do contingency planning for Y2K because they are doing reactive work right now."

Debow also anticipated a general slowdown in shipping in the region in the weeks straddling the new year as companies avoid taking chances with ports that might fall victim to the bug.

"Many of the corporates we speak to in Asia have already indicated to us they will be slowing their shipping and distribution levels in the last six weeks of 1999."

"Many foreign companies will be stopping shipments into Asiain that period," Debow said.

Software used to run container terminals were highly Y2K-sensitive and there are plenty of embedded chips in equipment used to load and unload vessels, he said.