THE Sino-British talks have become no more than a public relations exercise, those who are close to them say. While Hong Kong public opinion supports continuing negotiations, both sides are prepared to keep the audience entertained with their shadow puppetry theatre. Behind Chinese walls, the charade is being read as a game of political brinkmanship, buying time to win the hearts and minds of the Hong Kong people. If past form is anything to go by, when both sides sit down to the 13th round of Sino-British talks tomorrow, the first hour will be taken up agreeing on a joint statement at the end of the session. Each side will exchange pleasantries and retire to while away the hours before lunch. If they were to emerge too soon, it would be immediately read that the talks had broken down. Nonetheless, the market has been swept off its feet. Champagne corks popped as United States institutional funds flooded into Hong Kong, spilling over into other centres of the region. This happened to coincide with one US guru turning ''maximum bullish'' after a week touring China. It seemed nicely timed, however, to support the Hong Kong Government's forthcoming debt financing programme for the new airport, if and when it is approved. The market initially thought China was ready to divorce economic reality from politics, but soon dispelled the idea as fanciful. Governor Chris Patten, in his policy speech last week, made it clear the ball was in China's court, but allowed enough room for an 11th-hour play-off. Weeks, not months, was his emphatic message. China denounced the ultimatum and threatened to undo all come 1997. But unlike past invective, China's response was one of measured temperance. Where does the market go from here? As Mr Patten would say, ask the Chinese. This is prophetic advise. After all, it was Lu Ping, head of Hong Kong and Macau Affairs Office, who foretold in April that the Hang Seng Index would climb to 8,000 if the Sino-British talks succeeded. With only three of the 15 heavyweight rounds to go in the knock-out contest, the market is already there, even though the chances of a clear decision look slim. Then, and no doubt now, Lu Ping expected the market would ''slump'' if the talks failed. Could we have major diplomatic incident in the futures market? Barry Yates is a director of Vickers Ballas
