Hong Kong stocks closed up 1.27 percent at a fresh 5-1/2-year high on Tuesday, while China shares touched an 8-1/2 year peak as investors cheered a loosening in the country's investment rules.
The benchmark Hang Seng index ended up 208.08 points at 16,637.53, a level last seen in September 2000.
Turnover amounted to HK$35.5 billion (US $4.5 billion), compared to HK$27.8 billion on Thursday, the last trading day before the long Easter weekend.
"Investors believe the hot money isn't going to disappear in the short term," said Alex Tang, research director at Core Pacific-Yamaichi International (HK).
The amount Chinese investors are allowed to place in overseas shares Deutsche Bank estimates it at US $2 billion this year - was unlikely to add significantly to turnover in the Hong Kong stock market, Tang said, but would help boost market sentiment towards China shares in the short term.
"Maybe only a portion of this amount will be earmarked for investing in the Hong Kong stock market - the rest will go to fixed income, or elsewhere."
H-shares, or shares in mainland companies listed in Hong Kong, rose 3.64 percent to 7,023.78, a level last seen in August 1997.
China's move to let domestic investors buy securities outside of home markets had delivered a shot in the arm to a Hong Kong bourse already at multi-year highs, analysts said. Metal companies cheered high prices, with Jiangxi Copper Co Ltd rising 12.23 percent to HK$7.80 after copper prices rose to a record high on the London Metal Exchange, supported by fund buying after the Easter holiday. Energy plays rose as oil prices hovered above US $70 a barrel.
China's largest offshore oil producer, CNOOC Ltd, rose 3.15 percent to HK$6.55, PetroChina Co Ltd gained 3.55 percent to HK$8.75, and Asia's largest oil refiner, Sinopec Corp, climbed 4.26 percent to HK$4.90.
Zijin Mining Group Co Ltd rose 12.26 percent to HK$4.35 and Lingbao Gold Company Ltd rose 4.46 percent to HK$5.85 on high gold prices.
Bucking the overall trend, ZTE Corp, China's second-largest telecoms equipment maker, slumped 7.17 percent to HK$29.15 after it estimated its first-quarter net profit would fall 50 percent or more due to an adjustment in capital expenditure.
Merrill Lynch cut its rating on ZTE from "neutral" to "sell".
Beijing Media Corporation Ltd fell 1.52 percent to HK$12.95 after it said on Tuesday it expected a "substantial negative impact" on its 2005 results due to a drop in real estate advertising income. The company did not publish any estimates.