Hong Kong shares surged to a record high Monday, boosted by Chinese-related shares after Beijing said it will allow approved mainland banks to invest in foreign stocks for the first time.
The blue-chip Hang Seng Index rose 511.03 points, or 2.5 percent, to 20,979.24.
China's banking regulator said late Friday it will expand the Qualified Domestic Institutional Investor, or QDII, program to allow approved banks to invest in foreign stocks and equity-linked products on behalf of clients - a move that could divert some of the money poured into domestic markets.
"Then QDII quota may continue to grow in the future, channeling massive mainland funds to Hong Kong," said Y.K. Chan, fund manager of Phillip Asset Management.
China's largest life insurer by premiums, China Life, soared 5.9 percent to HK$26.05, while bank HSBC rose 1.3 percent to HK$146.90 and China Mobile surged 3.9 percent to HK$73.75.
Chinese insurer Ping An jumped 7.3 percent to HK$47.70 after Hong Kong's index compiler said after Friday close that the stock will become a blue chip effective June 4.
Mainland financial institutions also rose sharply on hopes they will handle increased capital outflows from China.
China's largest bank by assets, Industrial & Commercial Bank of China Ltd., gained 2.4 percent to finish at HK$4.31.
Hong Kong bourse operator, Hong Kong Stock Exchanges and Clearing, a prime beneficiary under the QDII program, ended up 10.8 percent at HK$88.75.
Chinese steel maker Maanshan Iron jumped 13.8 percent to HK$6.78 while copper producer Jiangxi Copper surged 18.9 percent to HK$13.4.
Li & Fung bucked the market uptrend on concerns about slowdown in U.S. retail sales, dipping 0.2 percent to HK$26.30.
Chinese electrical appliance maker GOME plunged 11.5 percent to HK$12.56 on profit taking after reaching 52-week intraday record high of HK$15 Friday, with sentiment soured by news it is raising US$776 million (EURO 575.4 million) in net proceeds via top-up placement, convertible bond issue.