The Hang Seng Index - the region's most boring market in Asia this year - has rallied for two consecutive days to finish yesterday at 10,985.84, up 5.37 per cent so far this week. More tellingly, yesterday's rally came with a rise in turnover. Turnover was HK$10.87 billion, the highest this year and 62 per cent higher than the average this year of HK$6.82 billion. Hong Kong is virtually the only Asian market not to have benefited from a stream of data hinting at economic recovery in the United States and other markets, including, most recently, Japan. Until the close on Friday, the HSI had declined 8.52 per cent for the year, compared with rises of 18.2 per cent rise in South Korea, 2.33 per cent in Taiwan and 2.55 per cent in Japan. Hours later, the US Institute for Supply Manufacturing (ISM) announced that its closely-watched business activity index had for the first time since July 2000 crossed the level signifying expansion, sparking a buying spree on Wall Street that continued in Asia on Monday. 'What we saw from the ISM figures - as the US market reacted - was that it was certainly a strong indication of a recovery in the US,' said Chiu Man-wai, head of Hong Kong research at BNP Paribas. 'If that trend is sustainable . . . from a macro point of view we are set for potentially a quite strong rebound in the equity market and equities in general.' However, export markets that specialise in replenishing business inventories, such as Korea and Taiwan, will benefit more from a global recovery. Because of its linked monetary system, Hong Kong will also face the threat of a rise in interest rates from the US this year. Morgan Stanley strategist for Hong Kong and China Henry Ho agreed the picture was more mixed for Hong Kong, but said the upside would outweigh any potential downside. 'The global recovery will help Hong Kong's earnings,' he said, adding that the resurgence in other regional markets had left room for Hong Kong to catch up. Prospects of rising earnings could also help Hong Kong weather upcoming results from heavyweights such as China Mobile and Hutchison Whampoa, which might not be pretty. Mr Chiu said: 'They can all swing sentiment in the near term, but in the longer run we are getting the feeling that, around these levels, people should be comfortable regarding valuations. 'As long as we can get more confirmation on the outlook getting better, and with concerns like HSBC out of the way, we should be set for a better second quarter.' To sighs of relief, HSBC's results came in within expectations on Monday. Nonetheless, many hazards remain, not least of which is today's Budget speech. Analysts said the market could take another beating if the Government decided to raise taxes as a means of plugging the fiscal deficit.