INVESTORS yesterday found further signs of a compromise in Sino-British relations in a British newspaper interview with Governor Chris Patten, prompting them to buy and adding 110.23 points to the Hang Seng Index. The rise more than covered Monday's fall and was achieved in higher volumes to leave the index at 5,548.03 points, its highest level since November 30 last year. Sales totalled $1.71 billion, well above Monday's $954 million, although dealers said such figures were still way below average. Jardine Matheson, whose share price was badly dented by an attack by the New China News Agency recently, was the biggest winner among index stocks with a 4.7 per cent gain. HAECO and Swire Pacific, both of which have performed poorly as the row continued, also rose strongly. Trading started on a much higher note than on Monday, with the index rising sharply in early trade and not slipping back at all during the day, the early quote of 5,444.25 being the day's lowest. The rise came in two stages. In the morning shares added about 60 points after the first 15 minutes but hit a ceiling at 5,500 which they were unable to rise above, trading in a 15-point range below it. After lunch prices lurched up further, passing 5,500 with no resistance. The advance faltered a little from the day's high of 5,563.27 just before the close. ''The initial positive move in the market was largely due to the interview with [Governor] Patten in the London Evening Standard which indicated that he didn't rule out any compromise,'' said Mr Chris Malpass, sales director with Peregrine Brokerage. He said that Monday's other major news story - the visit of Chinese Prime Minister Li Peng to Shenzhen and his meetings with tycoon Li Ka-shing, chairman of Cheung Kong and other companies, and a representative of Mr Peter Woo, chairman of the Wharf group - was having less impact on investors. He said Mr Li Peng was merely following in the wake of a similar visit by patriarch Deng Xiaoping, who toured southern China a year ago and put the official seal of approval on the economic progress there. Brokers were divided over the afternoon rise, with some saying that a report of the Evening Standard article carried over the Reuters news agency had sparked it and others saying that investors had taken the first rise of the year as an excuse to jump back into the market. The futures market had an even better day, with the January Hang Seng Index contract rising 134 points to 5,586, 38 points above the cash price. For the past month the shortest Hang Seng Index contract has traded at an average of 55 points below the cash market. Yesterday's close is only the first time since the Sino-British row entered its current phase in early November that the futures contract has been above the cash price for more than a few hours trading. Total volume for all contracts was 4,440 lots, up 904 on Monday. Jardine Matheson shares closed at $44.25, their highest level for a week but still $4.25 short of their price before the attack by the New China News Agency on December 17. Of the six Jardines group shares, Jardine Matheson's were hardest hit by the attack. Other stocks which have fared badly in a range of sectors were leading the index up. HAECO added 90 cents or 4.5 per cent to $20.90. Swire Pacific A went up $1.10 to $30, and Hutchison Whampoa rose 50 cents to $15.40. A number of smaller stocks fell sharply as speculators dropped their shares. RJP Electronics, which posted a notice saying it knew of no reason for its sudden share price increase, had the day's second biggest fall - 5.6 per cent or 2.5 cents to 42 cents. The day's biggest fall was in Holian Investments, one of many which has seen its share price rocket on hopes of it being used as a vehicle for mainland interests. The company lost three cents or 7.1 per cent to 39 cents.
