investors look elsewhere for returns.

A comparison of stocks trading on the Bermuda Exchange shows that the most dramatic declines were in the financial institutions sector. All seven issues -- three banks, two bank warrants and both Bermuda Home issues -- have fallen since the end of December last year.

Losers outnumbered gainers two to one in the consumer services and information company sectors.

Overall, 18 issues fell, seven gained and six were unchanged.

Argus, a rare bright light, was up 13.1 percent. The insurer anticipates record earnings for the current fiscal year.

Two of three transportation stocks improved but utilities Belco and Telco were down.

Among media equities, except for Bermuda Press (Holdings) which declined slightly, were unchanged.

Not surprisingly, the lacklustre performance was reflected in the Bermuda Stock Exchange index, which measures the performances of the exchange's blue chip stocks.

The index, a composite of top local stocks, continues to decline. A rally in May was short-lived. The most dramatic decline was during the week ending November 1 when the index set record lows four out of five days.

Financial analyst Randy Somerville at First Bermuda Securities suggested local investors are directing more interest toward the booming US market.

The US market has returning 25 percent in each of the last two years, he said.

"Bermudian investors could be lightening up their local position and redeploying capital elsewhere,'' he said.

It appears that when the US market does well, the Bermuda market does not, and vice versa, he said.

Investors looking overseas "Fundamentally, there is no real reason for local stocks to be trading at the level they are (but) psychologically, investors are not that optimistic about the Bermuda market.'' Despite gains on the international business side of the economy, "there's a lot of pessimism. I don't think the future's all doom and gloom.'' Emerald Financial Group consultant Ingrid McKenna said Bermudain investors now have more overseas options.

The local stock market represents a very small percentage of the world market and "people are more aware of asset allocation and country weighting'', she said.

There has also been a move to currency diversification, she said.

"I deal with a lot of retiring Bermudians. And from an estate planning point of view, it's important to have currency diversification.'' There is a growing awareness among many younger Bermudians about stamp duty effects on family estates. Currency diversification reduces that effect.

Over the past year, Ms McKenna said she has seen an increasing trend of individuals who have held shares for 30 or 40 years looking to sell.

"In order to finance retirement, local yields are not adequate,'' she said.

Bermuda Investment Advisory Services financial analyst Mark Melvin said a line can be drawn between the local domestic economy, which includes tourism and retail, and the international business sector.

He said the local economy is not doing so well while international business is booming.

And local domestic economic woes were reflected in local company share prices, he said.

"There has been good (financial) news from the Bank of Bermuda yet share price is declining. There must be other (than financial) reasons. There must be domestic reasons.'' He also suggested a possible decline in the popularity of Government may be a factor.

"I don't think the peripheral issues have helped (Government),'' he said.