IT seems the Hang Seng Index has decoupled from the train pulled along by David Roche of Morgan Stanley. Share prices in Hong Kong yesterday blithely ignored the doomsday scenario that was one of the possibilities in his overview of where world economies and equity markets might head next year. There will have been great relief for that in Hong Kong, probably not least in the Exchange Square headquarters of Morgan Stanley. The Morgan Stanley locals, even those who have been here only a few weeks, may be starting to wince every time Mr Roche, or his colleague Barton Biggs, air their opinions about the China or Hong Kong markets. The view of the older hands is that 12,000 is still a realistic target for the Hang Seng, and Mr Roche's impression that the austerity programme - if it could ever be called that - had been unwound did not accurately reflect the facts as they are known. Mr Roche may now be dismissed as the man who cried wolf - but the wolf in the story did arrive and devour the sheep while the villagers refused to listen to the shepherd's calls. The test of the forecasts was not yesterday's record-breaking performance by the Hang Seng, but will be the action during the next 12 months. In this longer-term view, Mr Roche is not alone in his concerns. Other strategists in Hong Kong have formed a darkening picture of China's economy and are predicting a real test of the reforms and the policies of keeping them on track but under control. Slowly, but inexorably, the truth of the Chinese Government's ability to wrestle the economy down to a soft landing, or even keep it flying at a reasonable altitude, will emerge. But Mr Roche's latest bulletin has a far wider coverage than the mainland's immediate effect on Hong Kong's economy. He also questions the flow of funds theory, and the liquidity which is propelling share prices throughout the region. Yesterday saw records broken by the Singapore and Manila stock markets. Others are trading at recent highs, and most of the charts are pointing steeply upward. According to Mr Roche, perhaps not for much longer. The tap might soon be turned off, at least by US investors who are moving into Asia at an increasing rate. Mr Roche believes there is at least a 50 per cent chance that the US market will crash, crunch or crumble next year. Not because the US economy is about to implode, but because it is ready to boom, so interest rates will be hiked up and the money that has been moving into mutual funds, and then overseas, will rush back into safe, domestic, fixed-interest instruments. The result of a major downturn will be felt in Hong Kong and Southeast Asia. ''There will be a major correction in the emerging markets,'' he predicts. Anyone who does not feel a slight attack of vertigo every time the emerging market indices break ground should not be investing - they obviously lack the fears that bring prudence. The sustainability of the run must be open to question, but Mr Roche's concern that money will go back to the US like the tide going out could be wrong, because there have been some fundamental changes in investment patterns. US funds are fast learning about the region, and particularly China. An increasing number of new faces are joining the veterans attending roadshows in the United States. Morgan Stanley itself reckons that 60 per cent of its contacts on this circuit are now from first-time buyers. This wider sweep of investors means that there will be much more of a balanced view, rather than a herd instinct at work. If the US booms, and interest rates do rise, these investors are as likely to look at the long-term benefits of Asian economies as they are at the shorter-term gains from switching back to the old instruments. The outward momentum is shown by figures from the Securities Industry Association of New York. These show that in the first quarter of this year, US$1.04 trillion net was invested in Asia, without including Japan. This is not far behind 1991's total of $1.46 trillion, which was followed by a surge to $4.44 trillion last year. Peregrine Investments points out that US funds have invested more in Telefonos de Mexico than in the rest of the regional markets they cover. There is still a lot of room for US investors to widen their portfolio coverage, without beginning to be questioned about imprudence.