THE agreement on the Court of Final Appeal should help relieve tension in the market, but is unlikely to underpin significant gains this week.
It will be welcomed by investors increasingly desperate for a sign the Chinese and the British are capable of reaching agreement on any issue.
The American Chamber of Commerce, for one, said the agreement would boost international confidence in Hong Kong's growth and financial status, but was unlikely to provide a platform for substantial rises in the Hang Seng Index.
Investors probably will be more intrigued by what is happening in New York, where profit-taking has knee-capped recent highs on Wall Street.
They also are watching the US Federal Reserve closely for clues about its intentions with regard to interest rates.
Hopes of an easing were dashed last Wednesday when remarks by Fed chairman Alan Greenspan appeared to rule out any risk of a US recession in the middle term.
Hopes of an interest rate cut had inflated US shares, analysts said.