Technology and telecommunications stocks' market dominance will continue for the foreseeable future according to investment managers Montgomery Oppenheim.

Technological innovation is radically altering the supply chains and distribution networks of diverse industries said Mr Brian Gray, manager of Montgomery Oppenheim's Technology Fund yesterday at the firm's annual conference.

Mr Gray believes a capital goods cycle driven by technology has replaced the old consumer goods cycle which led markets from 1980 to 1993.

In 1999 the Internet economy generated revenues in excess of $500 billion. Market concerns that growth rates in these sectors cannot be maintained are unfounded, he said.

Both industry and government are significantly increasing their spend on telecom infrastructure, software and e-commerce.

"Technology will continue to generate superior earnings growth and this will continue to be a significant differenciator between it and other sectors." By 2004, the business to consumer (B2C) market will exceed $380 billion and the business to business (B2B) market will increase to $7,000 billion. In a balanced portfolio, technology should be at least fully weighted, said Mr Gray.

Montgomery Oppenheim manages pensions fund assets and investments for both domestic and multinational companies.