The recent upswing of China's A-share market, which has been driven by rising market liquidity, is likely to extend further with long-term capital inflow and improved fundamentals, said experts.
The A-share market surged to a fresh milestone on Monday, with total market capitalization exceeding 100 trillion yuan (14 trillion U.S. dollars).
The Shanghai Composite Index closed 0.85 percent up at 3,728.03 points, after hitting an intra-day high of 3,745.94 points, its highest level in almost a decade.
The Shenzhen Component Index closed 1.73 percent higher at 11,835.57 points.
The combined turnover of these two indices reached 2.76 trillion yuan (about 387.56 billion U.S. dollars) -- compared with 2.24 trillion yuan registered on the previous trading day.
The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, gained 2.84 percent to close at 2,606.2 points on Monday.
Experts said in an interview with China Central Television (CCTV) on Monday that the uptrend has been propelled by strong liquidity.
"Today's A-share market was all about 'hitting new highs'. In terms of market performance, the recent market leader has been growth-oriented tech stocks, while the non-bank financial institution sector—a traditional bellwether of bull markets—have also played their part. Overall, we believe the core driver behind this sustained rally is liquidity," said Chen Yanbing, senior strategy analyst with China Asset Management Company Limited.
The market saw broad-based gains on the day, with over 4,100 stocks rising and more than 100 hitting their daily limit-up.
Sector-wise, liquid-cooled server stocks remained active, while aerospace and defense stocks rallied in the afternoon session. Leading the advance were computer, electronics, financial services, communication equipment, and media sectors, along with rare-earth permanent magnets, optical modules, and short drama games.
"We believe the driving force behind the next phase of the A-share market uptrend may shift from expectations of fundamentals' improvement to tangible progress. In terms of valuation, the CSI 300 Index currently trades at a price/earning ratio of only 13.5 times, still notably below its 2021 peak valuation of over 17 times. Supported by improving earnings expectations and a shift in capital flows, the current upward trend is expected to continue," said Ding Yang, fund manager at CICC Fund.
China's A-share market poised for sustained bull run: analysts
