TRADING in Hong Kong stocks for the year so far has passed $800 billion. A rough estimate of trading from January 1 to Friday is $801 billion, $101 billion more than last year. This has been achieved despite the loss of trading to New York and London. Only about a quarter of Hongkong Telecom trades take place in Hong Kong, and the territory has lost between 15 and 20 per cent of trading in major blue-chip Hang Seng Index constituents. This loss could amount to as much as $200 billion, which would have taken the total turnover for the year so far to $1 trillion had it been executed locally. While local brokerages' commissions total between $2 billion and $4 billion over the period, the loss of trading to other centres means brokers have missed out on about $500 million in commissions. With fundamentals sound, the key factor determining movement of the Hang Seng Index over the past two years, particularly the past three weeks, has been liquidity. It is a factor completely missed by most brokerages in Hong Kong in their forecasts for the market two years ago and in January of this year. Liquidity has allowed the market to rise in the face of domestic troubles. Brokers remain confident that the flow of money from outside will continue, even when the eventual death of China's paramount leader, Deng Xiaoping, is announced. In the coming week the index will be able to make progress on turnover of more than $6 billion. To break record highs it needs to be $7 billion or more. A loss in overseas buying momentum, and hence a decline in turnover, could see a consolidation in the index to below 8,500. Any event in China deemed very negative could take it below 8,000, but, with fundamentals sound, dealers expect such a correction to be temporary. In low or moderate turnover, domestic factors, including concern at the progress, or lack of it, being made in Sino-British talks, will re-emerge as market drivers. Domestic factors have not gone away, but the market has decided to ignore them recently. Continued strong overseas interest, especially from Europe, is probably assured until at least the end of the year. The reason for this is the predominance of neutral or underweight positions held by institutions in Hong Kong and Europe ahead of the United States institutional buying surge of September 30 to October 17. This buying brought in some $70 billion of turnover alone. Quite a number of institutions are still looking at ways of getting back respectable weightings in time for the year-end review. Then we should see the traditional Chinese New Year rally.