BEIJING, April 9 -- Through a stock connect scheme, Chinese mainland investors have been pouring money into the Hong Kong stock market, pushing Hong Kong shares to new highs.

For the second day in a row, mainland investors on Thursday used up the entire 10.5 billion yuan (1.69 billion U.S. dollars) daily investment quota allowed under the Hong Kong-Shanghai Stock Connect scheme.

The scheme initially met with scant interest and the quota had never been fully utilized before Wednesday.

Hong Kong stocks surged 2.7 percent on Thursday, as mainland investors keep up piling into the market. The Hang Seng Index closed at 26944.39, with a record turnover of 47.64 billion U.S. dollars. The index jumped 3.80 percent on Wednesday.

Analysts attributed the activity to the recent decision by the China Securities Regulatory Commission (CSRC) and China Insurance Regulatory Commission (CIRC) to allow mutual funds and insurance companies to invest in Hong Kong's growth enterprise market.

Charles Li Xiaojia, CEO of Hong Kong Exchanges and Clearing, said the daily turnover was a good sign that the market was moving in the right direction.

The investment frenzy is also attributed to lower prices compared to Shanghai; a huge valuation gap that drove mainland investors to the city.

With ample liquidity and strong confidence in the economy, Shanghai stocks shot up to 4000 on Wednesday, the highest close in nearly seven years. The high speed rail sector expanded by more than 3 percent, with CNR and CSR both up by the daily limit of 10 percent, as their merger progressed.

When investors think the price in one market is too high, they will choose another one, and this is one of the goals of the Shanghai-Hong Kong Stock Connect, said Zhou Songgang, chairman of Hong Kong Exchanges and Clearing.

The stock connect scheme is expected to generate billions of dollars in cross-border transactions every day, in a bid to realign China's stock market with international norms. Mainland investors are allowed to invest 10.5 billion yuan in Hong Kong each day, while Hong Kong investors operate on a 13 billion yuan limit in Shanghai.

A similar stock link program between the southern Chinese city of Shenzhen and Hong Kong is expected to start later this year.