AFTER the recent, spectacular Hong Kong bull run, which saw records smashed almost daily, bearish noises are once more being heard from some global strategists. They warn that Hong Kong may prove a dangerous place to be, if China does not behave in the way that Morgan Stanley's director of global strategy, Barton Biggs, has so bullishly predicted. Credited with being one of the major factors behind the bull market, a Morgan Stanley China research note identifies, almost from page one, Hong Kong as the way in for investors wanting a piece of the Chinese action. Political uncertainty in Hong Kong is dismissed as being of waning significance, while ''a soft landing'' is confidently predicted for China as a result of Vice-Premier Zhu Rongji's austerity programme. But not everyone is totally convinced by Morgan Stanley's arguments. Some have expressed alarm at the huge influx of foreign funds that drove the market to its heady heights. Michael Hughes, managing director of global economics and strategy at Barclays de Zoete Wedd, does not deny that China is an exciting market to invest in, and stresses that it should not be ignored. But he questions the wisdom of the heavy exposure thatsome investment houses have to the mainland through Hong Kong holdings. He suggests that while Hong Kong is the first to benefit from China's growth, it will also be the first to suffer if the mainland economy turns down. ''There was a fear among investors that the austerity programme would cause a downturn in the second half of the year. When that failed to materialise, people became keen on China again,'' he says. He warns that the adverse effects of the austerity programme have merely been delayed. ''The austerity programme was not as powerful as might have been assumed, but there are still some bad effects yet to come through.'' Tapan Datta, head of Asian economics research for American Express Bank, also believes the effects of the programme should not be ignored. ''We know from history that monetary policy operates with a lag of between eight and 18 months. ''It will be one year from now, I believe, that we will begin to see the significant effects of monetary stringency in China on Hong Kong.'' The amazing growth rate of China, which has fallen by only one percentage point to an annualised 13 per cent since June, has, says Mr Datta, proved difficult to control. ''Even advanced industrial countries, with sophisticated measures at their disposal to rein in the economy, have found that economic growth is very hard to slow down.'' As the need to prevent overheating increases, combined with the political proof that Mr Zhu may have to demonstrate to his opponents that his measures are working, the slowdown may become more aggressive. Mr Datta said: ''It seems to me that there is more than a small possibility that China will experience a strong downturn.'' The bears agree that China cannot be ignored in any credible emerging markets or Asian portfolio, but argue that exposure to it can be hedged in a far safer manner than direct equity investment in Hong Kong. Peter Chambers, chief investment strategist for James Capel, says that among the most predictable and safe mediums of investment in China are infrastructure and telecommunications stocks that are plays on China but are listed outside Hong Kong, or fixed-asset infrastructure investments on the mainland itself. For those taking a long-term view of China, and prepared to ride out the storms, says Mr Chambers, infrastructure and telecommunications stocks are a good way of limiting risk, but will mean also that China based-returns will be diluted. ''If you invest in the Siemens or the GECs of this world, exposure to China will be limited, and you might find that you are dissatisfied with your returns.'' Karim Chakroun, head of research at Union Banque Privee, says some investment managers have already recognised the interest in China of cautious investors unwilling to risk all in the volatile Hong Kong market. ''There are a couple of funds being set up who are playing the infrastructure game. But these are steering clear of equities, and investing solely in fixed assets.'' Kleinwort Benson's US$60 million China Investment and Development Fund is one such example. For Mr Datta, a further negative is the Hong Kong political issue, which he believes is still a time-bomb waiting to explode. In his most recent economic research analysis on Hong Kong, he notes: ''The 1997 issues have recently been neglected by the market, despite the lack of progress in the Sino-British negotiations. The market may now watch these talks more closely and, given the uncertainties, a pull-back on the market would not be surprising.'' Yet it remains the case that for every Hong Kong bear, there are still two to three bulls. Michael Hope-Lewis, chairman of Smith New Court Far East, says he has heard all the bears' stories before, and that the market has taken them into account is evidenced by its price-earnings ratio. ''Hong Kong is on 13 times 1994 earnings, while Singapore is on 20 times earnings and Malaysia on 21 times. With the type of discount that Hong Kong is currently trading at, I think the market has taken on board any fears over the Chinese economy or anypolitical worries.'' Mr Chakroun is equally dismissive of the potential demons that may lie in store for the hungry Hong Kong investor. ''There are very few places in the world where you cannot only fantasise, but where your fantasies become real, and you are not even paying for your fantasies. ''In Europe we fantasise about recovery - not a big recovery, only two to three per cent - and yet we pay 23 times for [European stocks]. In Asia we pay 15 times earnings for something that really grows.''