How the bulls have outrun adversity to take the Hang Seng Index by the horns Asian businesses are feeling their way through cyberdarkness and share prices are becoming more and more expensive, but investors just cannot get enough of the China growth story. Only two days after an earthquake severed key communication cables in Asia and left businesses scrambling for a dial tone, one of the region's key economic markers shows that investors are confident the lucrative harvest will continue. While the quake is not expected to have any long-term effects on the region's economy, it would have been enough to send investors reaching for the eject button if a downturn were on their minds. Instead, the Hang Seng Index topped 20,000 points for the first time yesterday, rising 276.18 to close at 20,001.91, surpassing many of even the most bullish predictions and handing investors a fat 34.45 per cent gain for the year so far. While some market experts predict there are still more holiday treats in store, they admit it is getting harder to ignore the heady bullishness driving share prices skywards as the key index logs its fourth consecutive annual gain. 'Hong Kong equities, and particularly Chinese equities, are getting expensive. [Mainland] banks and insurers are some of the most expensive in the world,' said Eddie Wong, the chief Asian strategist for ABN Amro, adding that Hong Kong stocks were priced at about 18 times forecast earnings next year, near the top of their historical range of 12 to 20 times. 'ICBC's market capitalisation is bigger than HSBC's. During the technology bubble Tom.com's market cap was bigger than Swire's, and at the time that did not seem right either,' Mr Wong said. A South China Morning Post survey of analysts conducted a year ago found on average they predicted a Hang Seng Index close of 16,563 points for this year, with estimates ranging from 15,600 to 18,400. Most analysts were expecting the index to end the year near 16,000. Andrew Look, the head of Hong Kong research at UBS and a renowned market bull, forecast in April the index would hit 17,900 by year-end. Then, in late August as punters continued to pile into the market, he set a 12-month index target of 20,000, but even that optimistic outlook could not keep up with investor appetite. Mr Look was unavailable for comment yesterday. Bullish investors appear unfazed by rising interest rates or the global hand-wringing over a possible United States downturn. High consumer debt, an inflated housing market and rising trade deficits all make the US economy look shaky. And as the US is the key buyer of exports from Asia, our fortunes are closely tied to those of Mr and Mrs Smith. Citigroup strategist Markus Rosgen said predictions on Asia's business potential were optimistic but that companies that did not rely heavily on exports to the US remained a sound investment. He said US$1 billion in fund money poured into Asia in the week before Christmas as managers tried to get their share of the presents. 'We're not in value territory. We're at the upper end of the range, but if the earnings come through, the market will carry on,' he said.