VOLATILE trading along with a long-overdue consolidation is expected in Hong Kong stocks this week. With the market apparently ignoring domestic politics, with the continuing marginalisation of the Governor, Chris Patten, and with warnings from China about the state of Sino-British relations, many analysts are asking what the key factor is in this bull run. There appear to be two or three answers to this. The first is liquidity. With improved trading infrastructure in place from two years ago, the exchange can handle more money going through the system, so comparisons with the past are not necessarily valid. We will start to get a real measure of how much money this market can take in one day - should positive sentiment prevail - on the launch of auto-matching trading later this month. The $9.09 billion record turnover on Friday, however, is being taken by some analysts as a crescendo. Enthusiasm for Hong Kong stocks from the United States, and the great size of funds managed there, means the weight of money striking the market will force it up. The moment turnover appears to moderate to around the $4 billion to $5 billion level, it can be read that some kind of plateau has been reached. Yet the US investor appears keen, and happy, to buy blind, picking up blue chips at any price. What might make them baulk at pushing up stocks to higher levels is the market rating, which is the second key factor. Although Morgan Stanley global strategist Barton Biggs appears to believe 17,000 on the index is conceivable, it is possible he did not imagine it would go up that far in a straight line. A 16 per cent rise in the index in 12 days ought to provide some room for a rest on the part of the index. However, what appears to be terribly scarce at present is selling pressure. What might trigger it? The re-rating of the stock market has taken Hong Kong's historic price-earnings multiple from around 11 or 12 just 18 months ago to over 16 now. In the past 12 days alone the Hang Seng index has been pushed up 16 per cent, taking the prospective rating of earnings on the market from 13.13 to 15.24 times. Profit-taking could be triggered given the re-rating. There will be a number of US and foreign institutions who might have bought the last time Mr Biggs was really enthusiastic about Hong Kong, some 18 months ago, and might be considering taking profits. The final factor affecting the market, and one which might bring sellers out in floods, is China and developments there. The announcement of the death of its paramount leader Deng Xiaoping might cause some concern. A repeat of last autumn's attacks on the territory's British governing establishment could offer an excuse for a consolidation.