Photo: IC

Shares of companies based in Shenzhen, a pioneering city in South China's Guangdong Province, soared after the central government announced on Sunday that it would use the first-tier city as a pilot demonstration area with Chinese characteristics.

The announcement led to gains in the Chinese stock market, which has been weakened recently by the ongoing trade war with the US.

The central government's plan was seen by observers as a move to upgrade the city and enable it to become one of the most advanced in the world.

In total, 66 Shenzhen-based companies listed in the Chinese mainland achieved an average gain of 5.6 percent, while the benchmark Shanghai Index climbed 2.1 percent to close at 2,883.1 points.

Shares of Shenzhen-based companies in the real estate, brokerage, telecommunications and new-energy industries posted solid gains, while state-owned companies based in the city led the rally.

Utility Shenzhen Gas Corp, infrastructure specialist Shenzhen Airport Co, and port operator Shenzhen Yan Tian Port Holdings Co soared by the10 percent daily limit shortly after trading began.

Shares of brokerage firm Guosen Securities Co and First Capital Securities Co reached the 10 percent threshold during afternoon trading. 

An employee at a Shenzhen-based fund told the Global Times on Monday that many people around him bought shares that reached the daily upward limit on Monday.

"People may read the central government policy document as there being fewer constraints from the top, and Shenzhen is to substitute some of the functions of the city across the river," the person said on condition of anonymity as he is not authorized to speak to the media, referring to Hong Kong.

Four decades ago, when China began its reform and opening-up movement, Shenzhen was a fishing village near Hong Kong. It is now home to a large number of globally known Chinese companies. 

Shares of telecommunications giant ZTE Corp, which was caught in the trade war and put on a US blacklist in 2018, saw its shares rise 6.32 percent on Monday. 

There was also a spillover for Shenzhen companies listed in Hong Kong. Shares of real estate company Kaisa Group Holdings were up 14 percent, new-energy car maker BYD Co gained 2.48 percent, and Chinese internet giant Tencent rose 3.19 percent.

"The rise in real estate company shares showed that investors are seeing a positive impact for the city's real estate sector," said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institution. 

Wang Daguo, chairman of Shenzhen Ruicheng Real Estate Marketing Co, said Sunday's announcement is a boon to the city's real estate sector. "In the long run, Shenzhen's housing prices will be as high as those in Hong Kong," Wang said.

Leading domestic, joint-stock commercial bank China Merchants Bank Co saw its shares close with a gain of just 0.4 percent. 

The blue-chip CSI 300 Index rose 2.17 percent to 3,791.09 points, while the Shenzhen Component Index climbed 2.96 percent to 9,328.97 points on Monday.