Hang Seng Index rebounded steeply in 1999, smashing the all-time high record set on August 7, 1997 with a 16,833-point close on August 24. Many analysts believe that there is still much room for the index to rise in 2000.

"The market has already jumped from a low of 6,000 to 16,000 and this is typical of the first stage of a bull market," said Delta Asia Securities research manager Ricky Tam Siu-hing.

The market has moved out of its previous consolidating range and is now in a new range, said Asia Financial Securities head of research James So.

The index closed at 16,660 on December 29, 1999, 6,612 points, or 66 percent, up from the close on December 31, 1998, and 10,000 points, or 150 percent, up from the five-year low registered on August 13, 1998.

The Hong Kong stock market became the 10th largest in the world with market capitalization amounting to 537 billion US dollars as of November 1999, 51 percent up from the amount registered in the same month of last year, when Hong Kong's ranking fell to the 11th from the ninth in 1997.

The main propeller for the market surge this year is the continuous inflow of external money and the inflow will go on next year, according to a research report of the Bank of China Group.

Whether the inflow will remain in the future is mainly decided by investors' weighing of the prospects of the Hong Kong market and the US market, said the report.

For the investors who pursue better return and less risk, the Hong Kong market seems more attractive than the US market, as the former has registered yearly growth of more than 20 percent for five consecutive years.

DBS Securities head of Hong Kong research Frederick Tsang Sui- cheong said the successful launch of the Growth Enterprises Market (GEM), the second stock market of the Stock Exchange of Hong Kong (SEHK) for technology and innovation based companies to raise capital, will attract more institutional investment to Hong Kong.

The GEM had raised 1.58 billion HK dollars (203 million US dollars) for the seven listed companies as of December 23 since it commenced trading on November 25, with a market capitalization of 6.25 billion HK dollars (801 million US dollars).

To attract more investment, the SEHK plans to introduce overseas-listed index funds next year.

"The funds should be tracking globally-recognized indices, such as the Nasdaq 100 Index, so that they could attract international investors," said Alec Tsui Yiu-wa, chief executive of the SEHK, at the year end review.

The presentation of the plan followed last month's successful initial public offering of the 33.33 billion HK dollar (4.3 billion US dollar) Tracker Fund.

The SEHK also plans to introduce the market-making system to enhance the market liquidity of securities and the third generation of the Automatic Trading and Order Matching System to enable straight-through ordering of trades via Internet and mobile phones.

The listing by introduction of seven Nasdaq companies, including Microsoft and Intel, is expected to be implemented in the first quarter of 2000.

Analysts believe that China's expected entry into the World Trade Organization (WTO) is significant for pushing Hong Kong market.

China's admission to the WTO will pull in foreign investors to Hong Kong, said South China Brokerage Vice Chairman Howard Gorges.

It will create extra demand for Hong Kong's space and service and also bring in more money for listed companies in Hong Kong, he said.

There are fears that a possible increase in the interest rates in the United States early next year could trigger selling pressure in the US markets, subsequently bringing Hang Seng Index to a trough.

However, the market is expected to rebound on further global liquidity inflow as domestic growth progresses.

"The mentality that has driven the market has switched from being driven by the Fed and interest rates to a mentality driven by growth, recovery of earnings and economic growth," Morgan Stanley Dean Witter Managing Director Peter Churchhouse said, referring to the US Federal Reserve.

Hong Kong saw a 4.5 percent economic growth in the third quarter of this year, and the research by the Bank of China Group forecast the growth to be 1.8 percent for the whole 1999 and 4 percent for 2000.