A SWIFT resolution to the current Sino-British dispute could see the Hang Seng Index soar to 7,100 points by year's end, according to Hongkong Bank's monthly economic report.
The report, which does not reflect official bank policy, says: ''If a speedy resolution to the dispute can be found, Hongkong's market will deserve a re-rating by investors.
''This may be substantial if there is an early resumption of China's General Agreement of Tariffs and Trade (GATT) membership and its Most favoured Nation (MFN) status is renewed unconditionally.'' The market's price earnings ratio could increase to 13.3 times from December's level of 12.6 times.
''An unfavourable developments in these areas may well cause the Hang Seng Index to fall below its 1992 close,'' the report warns.
The report predicts a fundamental shift in the stock market stemming from constraints in the local property market and robust growth in China.
''Stock market earnings growth should increasingly be fuelled by non-property related stocks, especially those of companies focusing on China's booming consumer market.'' The shift toward non-property-related sectors is likely to continue beyond 1993, enhanced by the listing of more Chinese-owned enterprises.
