To paraphrase

William Butler Yeats, cast a cold eye on life, on death.


pass by. Or at least that is the hope of many international investors, as they await the

Federal Reserve's

expected rate hike decision next Tuesday.

Perhaps even more intently than their domestic counterparts, international fund managers and investors will be closely watching the Fed's actions next week, as well as anticipating domestic moves over the next couple of months. In this age of interconnected markets, and with the currencies of some countries pegged to the dollar, what happens in the Fed's marble halls will affect bourses from Hong Kong to Sao Paulo to London.

The impact of the Fed's meeting next week will be felt far and wide, regardless of whether the action actually slows the economy or pushes it into a recession. The effect, however, will vary from country to country -- something savvy investors should keep in mind as they scope the globe for relative safe havens for their money.

Countries closely linked to the U.S., either with a dollar-pegged currency or with extensive trade with America, will take the biggest hit.

"I think it

the Fed hike will more clearly differentiate those economies whose monetary policies are not clearly connected to U.S. monetary policy," says Alexander Murmocew, a portfolio manager at the


Loomis Sayles International Equity Fund. "But the risk for some of these overseas companies is that their business is more closely tied to U.S. growth than many people might realize."

Latin America is pretty vulnerable. While the region as a whole is basically in good shape, with 4% growth expected this year, many investors are steering clear of it for the time being.

Merril Lynch

, for example, said on Thursday in a Global Strategy commentary that it is neutral in the region until "global markets stabilize."

It is a little more difficult to predict which countries will be hardest hit in Asia, the region Loomis Sayles' Murmocew covers. He counts Japan, Korea, India and Malaysia as countries that are least affected by monetary policy in the U.S.

Mark Headley, portfolio manager at

Matthews International Funds

, which include the

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Pacific Tiger and the

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Asian Growth and Income funds, points to Hong Kong and Singapore as countries that are traditionally affected by the Federal Reserve. However, markets throughout the region have been pummeled by volatility in the


, which is, of course, at least partly a byproduct of nervousness over the coming rate hikes.

Headley's biggest concern is that the Fed steps on the brakes too hard and the U.S. economy slows to a stop. Thus, for the time being Headley is steering clear of firms in Asia that export heavily to the U.S. He is paring back holdings in some, such as


, an investment holding company with subsidiaries heavily involved in exporting, and standing pat in others such as Korean electronics manufacturer


, even though he feels it is a world-class company that is still at a good price.

"We're not betting the ranch on them now," he says. "Last year if you bet the ranch on them you did pretty well."

Instead of buying Asian companies that export to the U.S., Headley is now buying -- or at least taking a strong look at -- companies that service the Asian market. Economies throughout Asia are still at the early stages of their economic cycles and consumer demand within Asia will be strong for the next couple of years. He is particularly excited about banks in the region. He says banks in Korea and Thailand are absurdly underpriced.

However, some fund managers are taking the Fed's expected action in stride. Steve Norwitz, a spokesman at

T. Rowe Price

, said their fund managers in Asia have not changed their strategies ahead of the Fed meeting. "We're expecting only a modest slowdown in U.S. growth," he says. The firm's

(PRASX) - Get Report

New Asia fund is up 42% over the last year.

With considerable potential -- and with continued volatility -- over the next few months, overseas markets could easily bring to mind Yeats' piquant description of Ireland: "a terrible beauty."

David Kurapka's Global Portfolio column appears Wednesdays and Fridays on TSC. In keeping with TSC's editorial policy, he does not own shares in any companies or mutual funds mentioned in this column. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at