JUST two years ago, if visitors asked the question (and they all did), ' What will Hong Kong be like in 1997', they were treated to a fairly stock reply of: 'Look around. What you see now, you will see then, but more of it.' That's not the answer that comes so readily today. As the countdown becomes shorter, so the doubts begin to creep in. The 'what if. . .' factor begins to figure in the equations. Forecasts that the mother of all booms will follow July 1997 - perhaps engineered by a China anxious to prove it can handle Hong Kong just as well as the unlamented colonial masters - are being questioned. Brokers S G Warburg argue that the 'official' inflow has already happened. The thesis that 1997 will bring forth a flood of investment from China, and therefore lead to a major economic boost, so pumping up the stock and property markets contains too many flaws for Warburg's liking. It points out that Chinese provinces and municipalities which are supposed to fuel this boom already are massively represented in Hong Kong. What could happen next is that money will flow the other way. As credit is tightened as a macro-economic tool, and the political drive against corruption bites, there will be less funds to shift across the border. The current weakness in property, retail sales, and other consumer spending is perhaps part of the malaise. Are people just temporarily put off by the fall in property values, or are they saving for a rainy day? The day they have in mind is examined in a bravely titled piece of research - Tuesday July 1 1997: where will the market be? - in which Warburg suggests it is conceivable we now are seeing the taking out of personal insurance policies on the future by a gradual shift in assets offshore. All those property agents from London, Vancouver, Sydney, Auckland, etc are not here for the climate, and the more money that goes abroad, the lower the charge in the local batteries. 'Building up assets offshore can be achieved either by liquidating existing assets or, as appears to be happening, by foregoing consumption. This is a logical reaction to uncertainty, if it contributes to a soggy economy, poorer employment prospects and lower economic confidence it risks becoming a self-fulfilling prophecy,' Warburg warns. The 'what if' . . . factor inevitably will affect investment decisions, and as Warburg points out, the shift in commercial assets by Jardine Matheson, HSBC Holdings, and more recently Li Ka-shing's family trusts, are just the most visible examples of a trend which already has been echoed by the cautious consumer. The assumption that 1997 will be like 1992, only more so, depends on the belief that trends continue indefinitely, but they don't - they mature. And Warburg is right to point out that one of the big trends - that of the switch to Guangdong by manufacturers - is largely over. There are fewer opportunities now to benefit from a shift across the border, if only for the fact that most of them have been taken up already, and Warburg also question whether all the expectations were credible. 'Many small manufacturers are reporting wage and other cost pressures as a result of high inflation on the mainland. Few property companies are willing to commit significant resources to China until the market has matured and a better legal framework emerged,' says Warburg. Another contributor to the 'what if. . .' syndrome is unemployment, until recently a factor that never entered anyone's equations. While the latest figures suggest the recent rise might be easing, the spectre has been sighted, and job insecurity could be affecting parts of the workforce whose lack of skills make them vulnerable. Warburg forecasts the uncertainty will take some of the upward pressure off wages across the board, and that will mean consumption being hit as inflation continues at its present high levels. Being a broker, Warburg has to reduce theories to the lowest common denominator - the market. So, where will it be in 1997? If lower interest rates in the United States fed through to renewed asset-price inflation, China's plans for Hong Kong became more certain, and earnings growth continued at about 14 per cent, then the Hang Seng could be up to 13,200. But, if Hong Kong has priced itself out of the market, if tighter credit combines with stagflation to hold down asset prices, and political uncertainties generate cash outflow, then stand back and watch out for a Hang Seng at 5,800.