SHANGHAI/SINGAPORE (Reuters) - Speculative fever in Chinese stocks is running red hot and catching the attention of some global funds, who figure local money is worth following into market segments sheltered from tariffs and likely to ride an eventual economic recovery.

A series of economic stimulus pledges by China in September unleashed the largest rally in Hong Kong shares in a generation and sent mainland stocks to two-year highs.

However, the subsequent lack of a splashy spending centrepiece tempered the euphoria as many big-time investors cashed out rather than wait for a more patient revival, especially as President-elect Donald Trump installs China hawks in top U.S. departments.

Yet while Hong Kong shares have recoiled, mainland stocks have switched gears and the cash streaming in from household savings accounts is highlighting the markets' hottest pockets.

"Money would rush into whatever stocks are in the speculative limelight," said Lu Delong, a retail investor in northeast China who said he has 2 million yuan ($275,000) in stocks and made a 40% profit since late September.

He bet on tech shares gaining as China insulates them from possible U.S. restrictions, buying China Great Wall Technology Group and Huawei supplier Visionox Technology, which have doubled since late September.

"For tech stocks, innovation cannot be proved unsuccessful in early stages, thus creating room for speculation," he said.

The speculative trade has pushed outstanding margin financing, or the money borrowed from stockbrokers for stock buying, to a nine-year high of 1.85 trillion yuan ($256 billion), according to data vendor Datayes.

Average daily volume for the Shanghai Composite has run at 2-1/2 times the ten-year average for the past two months and price moves point to even more action at the smaller end.

The BSE 50 Index of start-ups listed in Beijing is up 112% since late September, compared with the 12% gain left for the Shanghai Composite after its blistering rally.

"Speculative money and retail investors who don't care about fundamentals remain feverish," said Li Bei, founder of Shanghai Banxia Investment Management Centre, in a letter to investors.

Still, she increased her own net stock position to a nine-month high of nearly 50% in September and is focused on state-owned construction companies and the property sector, which has collapsed in recent years and is starting to attract bets on a recovery.

Fervour extends into derivatives, with options bets on rising prices also surging, according to David Wei, general manager of Shenzhen Chengyuan Investment Consulting Co, which helps investors buy such products from brokerages.

FOREIGN FOLLOWERS

The pile-in contrasts with foreign selling. China no longer publishes timely mainland flows data, but statistics from Goldman Sachs showed $16.9 billion outflow over the past four weeks as blue chips wavered and the risk of tariffs went up.

In Hong Kong, which draws many foreigners as there are no capital controls, a 15% fall in the Hang Seng index from October highs also points to selling.

"We have rotated into the A-shares market, and specifically the mid cap space," said George Efstathopoulos, a portfolio manager at Fidelity International, referring to mainland shares, and a sector that has handily beaten blue chips.

Efstathopoulos has been a seller in Hong Kong where he said stocks are more sensitive to U.S. rates.

"A-shares on the other hand have little sensitivity to U.S. rates and instead are more geared to China domestic liquidity and to fiscal stimulus."

Investment bank strategists have broadly endorsed the trade, with Goldman, Morgan Stanley and HSBC all preferring mainland stocks in flagship research notes published in recent days, citing exposure to stimulus and to onshore investment trends.

"In mainland China, over $20 trillion is sitting in bank deposits, twice the market cap of the A-share market ... some of this money is gradually being allocated to equities," strategists at HSBC led by Herald van der Linde wrote in note on Tuesday

Both foreign and domestic investors see one consequence of rising trade tensions being a shift to self-sufficiency in China and have bought chip makers in particular in anticipation that they will earn revenue that would previously have flowed abroad.

November's Bank of America survey of Asia fund managers found just 8% of 120 regional respondents regarded themselves as "fully exposed" - with the rest balanced between bulls and bears and about a third content to wait for more support.

"I am sure there will be one or two more stimulus packages," said Michael Browne, CIO at Martin Currie, part of Franklin Templeton, an equity specialist fund manager that manages around 22 billion pounds ($28 billion), which is neutral on China.

"We're positioned for when the rally comes, and it will come," he said. "The China trade could be the one that catches everyone out."

($1 = 7.2407 Chinese yuan renminbi)

($1 = 0.7884 pounds)

(Additional reporting by Dhara Ranasinghe in London. Writing by Tom Westbrook.; Editing by Shri Navaratnam)