INVESTORS last week got to have their mooncake and eat it too. With no interest rate rise earlier in the week, the Hang Seng Index broke the 11,600 mark and set a new high for the year. On Friday, the index popped over 11,700 points - which had been beginning to look like a steel-reinforced ceiling. In fact some bears have started to sneak out of hibernation and tell us the party is over and we are 'maxed out at 11,700'. So what's holding us back and what do we need to get on? If the index remains above 11,700 the next stop is likely to be the all-time high of 12,201, set back in early 1994 when the phrases like 'property slump' and 'slowing local economy' were not in the investors' dictionary. Repeated record-setting by the Dow will not be enough to get us there. Interest rate cuts could do it, but these are not on the cards. We need a local catalyst. Thinking back to the last major bull run we recall October 1983 when Henderson Land's magnificent results stunned the market, making investors realise just how much money was made in the property market boom of 1993. A revised net asset value (NAV) for the share was just icing on the cake. Then came Barton Biggs with his now-legendary 'maximum bullish' statement and the rest was history. The market is well aware of the property run over the last months and we've seen solid earnings come in from Cheung Kong and Henderson Land. But they are nowhere near the magnitude of gains seen in 1993. Property developers have led the index's recent charge and are now trading near or above their NAVs. It will be difficult for them to bring the index on any higher. In addition, the utility sector is the real party-pooper. While property and bank shares are at all-time highs or better, the utilities are a long way off. In fact, if the index was recalculated without this sector it would already be at all-time highs. To expect the utilities to recover and aid the index over 12,000 is wishful thinking. Only a possible purchase of Hongkong Telecom by mainland authorities might galvanise things, but we don't see this happening yet. Some kind of grand gesture by China is definitely what we need. All the other pieces are beginning to fit together. China and Britain are finally sitting down - even the Democrats. The Diaoyu Islands saga seems to be bringing Greater China closer together and there is a general easing of concerns about 1997. For us, it is property that will do it again. In 1993 it was 9 Queens Road and the Lippo Centre. Imagine the party the day Hongkong Land sells Exchange Square 3 to a mainland party at an 'exorbitant price'. The property market will fluoresce and, given the amount of property investments held by listed companies - together with the massive feel-good factor - the index as a whole will explode. It will truly be time for the index to re-rate and get rid of the redundant 1997 discount. We received several e-mails last week concerning our warrants and why we don't invest in any. Remember, under our self-imposed rules we can only trade on Friday's closing prices so warrants are too volatile for the widow-and-orphan-friendly disposition of our portfolio. But for the investor who understands the risks, warrants can be worthwhile. Our personal favourites are certain warrants on Hutchison, Cosco, China Light & Power and possibly China Resources.