HONG KONG is poised to capitalise on growing worldwide interest in what appears to be one of Chinese traditional medicine's most astounding resources - the humble mushroom. China has long used mushrooms to prevent disease, but delegates at the first international conference on them maintain that their medical potential has only just begun to dawn on the rest of the world. The Conference on Mushroom Biology and Mushroom Products, under way this week at the Chinese University, has already addressed the potential of some types of mushroom for fighting cancer and AIDS. Professor Chang Shu-ting, chairman of the university's biology department, told the conference yesterday that at least one mushroom extract, polysaccharide peptide (PSP), was a proven agent against the development of cancerous tumours. ''More importantly it can enhance the immuno-regulatory system,'' Professor Chang said, adding that recent Japanese studies suggested the extract could be used to combat AIDS. The worldwide market for mushrooms as a medicine was worth about US$1.5 billion (HK$11.62 billion) and could grow enormously with increasing interest from Southeast Asian and Western countries, he said. Professor Chang said very few mushrooms were grown in Hong Kong, but the territory could become the major manufacturer for China of mushroom-based medicines because of its superior quality control and packaging. ''We will become a headquarters for manufacturing and distribution,'' he said. More than 300 delegates from about 40 countries are attending this week's conference.