MERCHANT bankers predict the onward march of red chips will continue next year as more China-related companies float shares to raise money from the Hong Kong market. They also predict that more regional companies will join the trend to list on the Hong Kong stock exchange. Six mainland enterprises listed on the Hong Kong exchange this year and another three are due in the first quarter of 1994. A second batch of state-owned firms seeking flotations here will soon be announced. Hong Kong companies ''spinning off'' their China investments have also been a feature of this year. Henderson Land shed Henderson China, New World Development got rid of its China arm and sought a listing in Dublin, and Hopewell spun off its Chinese power plant arm. Edward Chan Hung-kee, vice-president of Nomura (Hong Kong) International, said foreign companies - particularly from Japan and Malaysia - were also seeking separate listings for their China investments. ''It will be good for investors if Asian companies seek separate listings in order to focus on China development,'' said Mr Chan. Clement Kwok King-man, director of Schroders Asia, agreed that it was a good move for companies to float shares if they wanted to increase their exposure to China. This year there were 62 companies listed locally, raising $23.67 billion. Eleven of the new listings had China connections and between them accounted for 56 per cent of the total funds raised during the year. The listings were good news for investors - shares in Kunming Machine Tool, for example, increased by 390 per cent and Wing Shan's share price rose from $1.02 to $4.525, a 343 per cent rise. Most H shares performed well, with Tsingtao Brewery rising 230 per cent, Beiren Printing 205 per cent, Maanshan Iron and Steel 100 per cent and Shanghai Petrochemical 126 per cent. Companies classified as having a China background include H share state-owned firms, mainland companies listed locally, such as Guangzhou Car Maker, Denway Investment, refrigerator firm Hualing and the parent company of Foshan Power Plant, Wing Shan International. Collective enterprises, many of which have a background in China, are also expected to come to the fore. There were four banks listed in this year - Wing Hang Bank, International Bank of Asia, Dao Heng Bank and Manhattan Card, which all have a long local history. Liu Chong Hing Bank may also seek a listing. Nomura's Mr Chan said many smaller banks would be more competitive if their shares were floated locally. Massive over-subscription was one of the characteristics of the capital market during the year. Denway Investment's shares were 627 times oversubscribed, for example, forcing the authorities to set guidelines for banks on lending for new issues. The move was initially effective, but oversubscription reared its ugly head again recently when Kunming Machine Tool, Esprit Asia and Dao Heng Bank were massively oversubscribed, creating a credit crunch.