HONG Kong's stock market again defied political developments yesterday to surge to record heights and clock up record turnover. Not even the gazetting of Governor Chris Patten's political reform bill could dampen the optimism. The panic which drove the market down last December has been forgotten. As far as international financial markets are concerned, the Sino-UK row is largely irrelevant. Is the stock market fantasy land? Or is the economy so firmly set on China's growth path that the Hong Kong tradition of making money will override any political setbacks? At first sight there is little to justify such a radical reversal in market sentiment. Political agreement looks as remote now as it did a year ago. Progress in the Joint Liaison Group is painfully slow. China continues to block agreement on big projectsand looks determined to destroy the credibility of the territory's political institutions. But there has been no repetition, so far, of last year's ranting threats to repudiate contracts signed by the British or wreak vengeance on British companies for the sins of their drug-running forefathers. With less than four years to go before the handover to Chinese rule, Hong Kong's role as a gateway to China looks assured. Few now doubt that any economic sabotage China may perpetrate before 1997 will be speedily undone thereafter. To investors in the United States, Europe and Japan, investment in Hong Kong now is an investment in China in the future. Our market has been underrated because of past doubts about China's ability to sustain growth. It is being re-rated upwards to take account of optimism about China's prospects, not Hong Kong's. Meanwhile, local companies are raising cash while the going is good. Once the airport gets the green light from China and the Provisional Airport Authority starts raising loans instead of relying on injections of public money, local credit will be much tighter. Politically, the storm looks set to rage for months, perhaps years, to come. To the stockmarket, it barely touches the rim of the teacup.