In the face of a significant slowdown in underwriting, analysts are suggesting that U.S. investment houses expand their retail brokerage business overseas.

Players that concentrate on the domestic market, like Charles Schwab Corp., may be left behind if they do not expand, wrote Henry H. McVey, an analyst at Morgan Stanley Dean Witter & Co. in New York. “Clearly the opportunities in the United States are significant,” Mr. McVey wrote. “But we believe that management should and could be moving aggressively overseas.”

In a Dec. 20 industry report, Mr. McVey praised Citigroup Inc.’s “truly global footprint” and Merrill Lynch & Co.’s recent international alliance with HSBC Holdings PLC. But he criticized Charles Schwab as “lagging” in expansion abroad.

Schwab, like many of its peers, has seen a slowdown in the pace of individual equity investing in the United States because of market volatility. The slowdown prompted Schwab management to cut back on its executives’ base pay until March.

Andrew Collins, an analyst at ING Barings, noted that the growth rate of U.S. online investing has slackened, and that “Schwab, which is heavily focused on electronic trading, is largely a domestic player.”

He added, “When you are in e-finance you have to go abroad, and they are not pushing the envelope.”

But not everyone sees Schwab’s strategy as limited.

Gerard M. Cronin, an analyst with McDonald Investments, a Boston subsidiary of Cleveland’s KeyCorp, said that Schwab is well positioned to expand on par with the biggest players in the next five years.

“Schwab is taking a prudent approach” to its overseas expansion, he said. “They are not in the big picture, but they are out there.”

Mr. Cronin said Schwab might have a competitive advantage in countries such as Germany and Japan, where people are interested in technology and where equity as a part of private investment portfolios is still a new idea.

But Mr. Cronin conceded that companies like Morgan Stanley and Merrill Lynch have an edge over Schwab because they can use their international investment banking presence as a springboard to the retail market abroad, while Schwab cannot.

Schwab, which is based in San Francisco, already has offices in Japan, Britain, and Canada, said Glen Mathison, a company spokesman. However, he said, continental Europe is still a difficult market — particularly Germany, which is “heavily dominated by banks,” he said.

Mr. Mathison said Schwab is not concerned that a lack of broad international exposure will hamper its growth, especially given the size of the U.S. baby boomer generation and its corresponding assets. The average Schwab customer, he said, has a portfolio of approximately $120,000.

Trading at a high multiple of 55.19 times its earnings per share, Schwab lost 87.5 cents, or 2.99%, on last year’s final trading day, closing at $28.375.

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