IS Hong Kong ready to grunge? MTV VJ and front man of the Power Onions, Danny McGill, thinks so, Australian sensation Ratcat says Hong Kong's hungry for new music, Hong Kong's Sea Music is banking on it, even the beer company Fosters is prepared to get behind the latest musical form. And so Hong Kong's first grunge party is set to rock the house. It all takes place at Neptune II, Wan Chai, next Thursday. Chart topping band Ratcat head the bill, along with Hong Kong's Power Onions. Ratcat made their debut at last October's Wan Chai Music Festival and were the international hit of the festival. A few local gigs followed and, according to lead singer Simon Day, the response was positive. ''There were a lot of people dancing around and enjoying themselves, which is always a sign that you have had a good gig, said Simon, who's hoping for a similar energy level at Thursday's gig. ''Grunge or alternative music is for young people to relax a bit with and let out their expression, that's the good thing about new music. In Asia there seems to be a widening interest and acceptance of new music,'' he added. The rest of Asia still has a long way to go musically to catch up with Australia, which Simon described as a fantastic breeding ground for new music, and where more and more ''alternative'' acts are spilling over into the mainstream. Ratcat have been one of the leaders in this recent transition from the indie scene to mainstream charts, having scored a number one single and album at the same time in 1991. This burgeoning industry is now developing in Asia, and increasingly there is an outlet for new musical sounds in cities such as Hong Kong. And groups like Power Onions are now starting to get the attention of record companies as well - with a recording deal now in the final stages of negotiation. - and are seeing the development of local bands and audiences. ''Once a month they have a metal convention gig at the Ko Shan theatre playing all sorts of thrash music and they pack it out. All it's going to take is one success and the door is going to be opened,'' believes Danny McGill. Meanwhile, instead of sitting around and waiting for the big break record deal to roll around, Hong Kong's bands are taking things in their hands and producing their own CDs and tapes, as Mothership, Sisters of Sharon and the Radio Free Hong Kong crew have done. In Your Face Grunge Party, Neptune II, Thursday May 12. Tickets $150 and available from Tower Records, Sea Music and Neptunes I and II.