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Turnover to rule index

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WHAT happens to the Hang Seng Index this week depends on liquidity.

Turnover of less than $6 billion would indicate sideways trading in index stocks.

Market activity pushing above $8 billion, and especially above $9 billion, would indicate a significant rise in the index on the back of a lot of overseas cash.

Another stall in Sino-British relations might not have the bad impact it did this time last year. The only danger would come if Beijing began issuing aggressively anti-British and anti-Hong Kong statements - as it did this time last year - which took the index to 4,978 on December 3.

A stalling in relations would only re-affirm the status quo and would be of little concern to investors, either in Hong Kong or abroad. At worst, Sino-British relations might provide an excuse for a profit-taking consolidation.

Good news from the summit of the Asia-Pacific Economic Co-operation group in Seattle and news on China's trade relations with the United States following the Sino-US summit at the APEC meeting could help positive market sentiment along.

Good news from the Chinese Communist Party plenum could have a similar effect.

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