HONG KONG, Sept. 29 -- Hong Kong stocks posted the biggest quarterly gain since the so-called dotcom boom in 1999, surging on speculation money from China's mainland will pour in as the government eases investment curbs.

Central government said on August 20 it will allow some individual investors to buy shares in Hong Kong, where valuations are less than half those on the mainland.

Stocks such as China Mobile Ltd and China Life Insurance Co also got a boost when some Chinese mutual funds were cleared to invest.

The Hang Seng Index yesterday closed at a record 27,142.47 and the market value of shares listed on the city's exchange exceeded HK$20 trillion (US$2.6 trillion) for the first time.

The benchmark's 25 percent gain since the end of June is the biggest since the fourth quarter of 1999, when a rally in United States technology stocks and efforts by Chinese companies to introduce online services helped lift the index 33 percent.

"Given the prospect of Chinese liquidity moving into the market, there's no telling how quickly, or how high, the index would go," said Hugh Young, who oversees US$50 billion at Aberdeen Asset Management Asia Ltd in Singapore. "Is it thinkable the Hang Seng could reach 30,000 very soon? Definitely."

Mainland investors may funnel US$100 billion into Hong Kong in the next 12 months, Adrian Mowat, JPMorgan Chase & Co's Hong Kong-based chief Asian strategist, wrote in a report on September 18.

William Liu, CLSA Ltd's head of China research, expects as much as US$45 billion in the next six months. Daily turnover on the city's bourse has averaged HK$97 billion (US$12.5 billion) this quarter and reached a record HK$148.6 billion yesterday.

Central government is relaxing curbs on overseas investment to help prevent economic growth and domestic share prices from climbing too far, too fast.

Growth reached a 12-year high of 11.9 percent in the second quarter, inflation is at a decade-high 6.5 percent and the CSI 300 Index has quadrupled in the past year, the best performance among 89 global benchmarks tracked by Bloomberg News.

The Hang Seng Index had its biggest one-day gain in almost nine years on August 20, when China's currency regulator said citizens with a Bank of China Ltd account in Tianjin's Binhai economic zone will be allowed to invest in Hong Kong stocks.

It's jumped another 25 percent since then on speculation China's households will pour some of their 17 trillion yuan (US$2.3 trillion) savings into the city's equities.