A BUYING splurge strengthened by the news that the yuan rates were to be unified powered the market to a record close just 123 points short of the 12,000 psychological barrier. The Hang Seng Index rose 427.70 points - the stock exchange's second largest one-day gain - or 3.74 per cent to close at 11,877.47. The market also renewed the intra-day high to 11,959.06, a mere 40.94 points from 12,000. A stampede of overseas institutions, and of local investors who could not help jumping on the bandwagon in the euphoric atmosphere, churned out a turnover of $10.86 billion. Brokers said new funds - especially those from Japan - which were hunting for laggards constituted a significant buying force. ''The market was a bit out of [touch with] reality . . . It is obviously over-bought,'' said Peregrine sales director Chris Malpass. ''Historically, to see a rally of this magnitude is unusual'' given even the usual rally in the run-up to the Lunar New Year, he said. PBI Securities sales director Ivan Leung said the leap came as a surprise: ''It had been expected that investors returning from holidays would be on the sell side.'' Some brokers believed China's plan to unify the dual yuan rates announced on Wednesday afternoon boosted the market, although others said that was just an excuse. ''The yuan unification will help China re-enter the GATT [General Agreement on Tariffs and Trade] which will benefit the local economy,'' said Mr Leung. Activities focused on blue chips, which rose almost across the board. ''Sentiment was strong, momentum was strong, and turnover was good,'' said South China Brokerage managing director Howard Gorges. The trading pattern in the futures market also injected some upward momentum into the spot market. January futures traded at a premium throughout the day, closing 280 points higher at 11,970 - a 93-point premium to the spot market. An estimated 11,775 January contracts were traded. The spot index opened at the day's low of 11,540.53, rocketing dramatically to 11,768.12 in the first quarter of an hour. Investors then calmed down, sending the index on a gradual rise to close the morning session at 11,877.04. Lunch re-charged the batteries of the buyers, with the index sprinting up to the day's high of 11,959.06. Just 15 minutes before the market close, profit-takers crammed in amid rumours that some blue chips would tap the market for funds. That left the index on a falling path until the end of trading. Brokers said the profit-taking after a four per cent jump by the index was natural. Local stocks are now trading at a price-earnings multiple of about 16.7 based on 1994 earnings forecasts, and around 19.7 based on 1993 earnings. Overnight trading in London saw mild selling pressure. At about 10 pm Hong Kong time, an estimate of the index showed a 96-point loss from the local close to 11,782. Brokers expected the market to remain strong today. ''I think the market is likely to continue its [upward] movement,'' said Mr Malpass, adding that institutions were unlikely to decide to change their present strategy around this holiday period. ''I believe the market will be more steady but still on the strong side,'' said Mr Leung. Mr Gorges said: ''One can't tell when it [the bull run] is going to stop.'' But he warned of the possibility of notable profit-taking within the next two months.