Hong Kong Stocks Surge to Seven Year Highs

Hong Kong stocks surged to a seven-year high and a gauge of mainland shares in the city jumped on speculation the market will catch up with its world-beating Chinese counterpart.

The Hang Seng Index soared as much as 6.4 percent before paring gains to 2.8 percent at 10:35 a.m. local time. The Hang Seng China Enterprises Index climbed 2.6 percent, after jumping 7.3 percent earlier. Hong Kong Exchanges & Clearing Ltd. rose 6.5 percent after the bourse reported record trading volume on Wednesday. Lenovo Group Ltd. climbed 8.7 percent.

Mainland investors used up more than half their quota to buy Hong Kong stocks through the city’s Shanghai exchange link. Hong Kong shares are rallying after valuation discounts in the city reached the most extreme levels since 2011 and mainland authorities made it easier for domestic funds to use the cross-border bourse link. After propelling the Shanghai Composite Index to an 85 percent gain in the past 12 months, mainland investors bought as many Hong Kong equities through the exchange link as regulators would allow on Wednesday.