BOOM! Hong Kong stocks have surged over the past two days, as mainland investors flood the market with wads of cash.

    The Hang Seng Index hit its highest point in seven years Wednesday and continued to soar Thursday, pushing the market up 6.6 percent this week and about 14 percent this year.

    Analysts say mainland investors are turning to Hong Kong after a dramatic 22-percent surge this year by the Shanghai Composite has made that market too expensive.

    Many of China’s biggest companies are dual-listed in Hong Kong and Shanghai, and savvy investors have long turned a profit by playing off the different share prices in the two markets.

    Trading activity is also flooding Hong Kong through the “stock connect” pilot program, which linked trading in the Hong Kong and Shanghai markets starting late last year.

    The much-anticipated program drew lackluster interest from investors at first. But now, the China Securities Regulatory Commission has started letting mutual funds invest through the “stock connect,” boosting trading volume.

    The program has a daily quota for trading activity in both directions — from the mainland to Hong Kong, and the reverse. Trading traffic from Shanghai to Hong Kong maxed out its daily limit for the very first time Wednesday and again Thursday.

    The Shanghai Composite and Shenzhen Composite markets have posted staggering gains to date, with Shenzhen spiking over 47 percent, making it the world’s top-performing index.

    Meanwhile, Chinese stocks are making a strong comeback in the United States.

    Nineteen U.S.-listed Chinese companies including Yanzhou Coal Mining Co., Youku Tudou Inc. and cosmetic e-commerce Jumei International Holding jumped by more than 10 percent Wednesday, compared to a 0.15-percent advance in the Dow Jones Industrial Average.

    U.S.-listed Chinese technology stocks are catching up in valuations, said analysts, as, according to Bloomberg, the industry is traded in its home market at an average 220 times reported profits, the most expensive level among global peers.

    (SD-Agencies)