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. Last Updated: 07/27/2016

Hong Kong Market Gets China Boost

HONG KONG --Stocks climbed to a record high in their busiest trading day in Hong Kong, after China's government said it would let its banks buy shares overseas for the first time.

China Mobile and China Life Insurance led gains on speculation that the city's Chinese listings would attract some of the 35 trillion yuan ($4.6 trillion) of savings in China, where markets have almost tripled in the past year, making them the region's most expensive. Hong Kong Exchanges & Clearing surged on expectation that rising trading volumes would boost profit.

"This is all part of the positive China story," said Geoff Lewis, head of investment services at JF Asset Management in Hong Kong, which manages $88 billion in Asia. "Good sentiment toward China is good for Hong Kong also. The two markets are becoming more and more interlinked, so you can't really count them as separate markets anymore."

The Hang Seng rose 511.03, or 2.5 percent, to 20,979.24, the biggest fluctuation among equity markets included in global benchmarks. Just four stocks declined on the 38-member index, which posted its biggest climb since June 30. The Hang Seng China Enterprises Index, which tracks the so-called H shares of 41 mainland companies, jumped 5.4 percent to 10,948.72.

Commercial banks can invest as much as 50 percent of funds in the qualified domestic institutional investors program in overseas stock markets, the China Banking Regulatory Commission said May 11. Investors need at least 300,000 yuan to buy such financial products, the regulator said.

Banks based in China have been approved to invest a total of $13.9 billion overseas, the banking regulator said. This implies a maximum of about $7 billion available for investment in stocks outside mainland China.

Analysts at Deutsche Bank AG estimate that about $10 billion will flow into Hong Kong's stock market in the next 12 months.

China Mobile, the world's largest mobile phone operator by users, gained 2.80 Hong Kong dollars, or 4 percent, to 73.75 Hong Kong dollars. China Life, the nation's biggest insurer, climbed 5.9 percent. Sinopec 10 percent. Those three stocks accounted for 38 percent of the Hang Seng Index's advance Tuesday.

Chinese companies traded in Hong Kong, "Will be the obvious initial beneficiaries of the Chinese wall of liquidity when domestic investors start where they know the most," analysts at JPMorgan Chase, wrote in a report Monday.