The shake-out in technology stocks is beginning to provide buying opportunities for investors, but careful selection is essential. A new report by HSBC brokers suggests the best place to focus on at the moment is the US market, where many of the hitech stocks have taken a hammering. It warns that investors should take their time looking at other markets where further falls may yet materialise.

It recommends buying selected stocks trading at weak levels throughout the third quarter of 2000. For those considering buying technology shares at the moment, HSBC offers the following rule of thumb: while bubbles tend to overstate future potential growth, crashes tend to do the opposite. "Finding the long-term survivors during a share fall can be very lucrative."

HSBC notes that semiconductors at the commodity end are vulnerable in the short term to downward revisions to global economic growth, but do present excellent medium-term opportunities. It remains cautious on dot.coms, media, personal computer manufacturers, fixedline operators and information technology services.

It recommends Baltimore Technologies, Cap Gemini, Cable and Wireless, Ericsson, Philips, Telefonica, United News and Media and Vodafone Airtouch.