Individual investors follow the stock market at a bourse in Nanjing, East China's Jiangsu Province. Photo: IC

China's A-share market rally gained steam on Thursday, with the benchmark Shanghai Composite Stock Index surging 2.13 percent to close at above 3,090 points on hopes that China's economy is recovering quickly, and a reported plan to strengthen home-grown investment banking houses is underway.

Thursday's big rally, which saw mainland stocks log a daily trading volume of more than 1 trillion yuan ($141.55 billion) for the first time in nearly four months, was led by an across-the-board surge in securities companies.

Shares of real estate developers, banks, airports and shipping liners also soared, while healthcare and agricultural companies retreated.

Underpinned by the securities board which shot up 7.5 percent on Thursday, the benchmark Shanghai index rose for the third consecutive session. The Shenzhen Component Stock Index was up 1.29 percent while the tech-heavy ChiNext board edged up 0.2 percent. 

The strength of brokerage houses, likely to prelude a bull run in the coming week, was backed by investor hopes of a long-anticipated "supply-side reforms" to rev up China's financial industry.

Over the weekend there were reports that at least two commercial banks in the country will soon be given access to set up securities trading branches.

The China Securities Regulatory Commission responded with a statement on its website in late June that it had taken note of media reports. While neither directly confirming nor denying the speculation, the securities regulator said the development of quality investment banks is an important means of pushing and expanding direct finance, and that there are multiple road maps for that to materialize, which remain under discussion.

The equity market doesn't have sufficient resources to finance China's industrial upgrade, while the country's mammoth banking sector is unsuited to direct fundraising for emerging sectors, given the risks associated with investing in early-stage businesses, Wei Fengchun, chief macro strategist of Bosera Asset Management Co, told the Global Times.  

With reforms of the nation's equity market well in progress amid broad-based efforts to pull the economy out of the shadow of the COVID-19, it is believed the capital market will play a bigger role in funding high-tech upstarts. 

The Shanghai Stock Exchange sat at the top of the global market as measured by IPO volume in the first half of the year, PwC data showed Thursday, as a good number of new technology firms floated on the high-tech studded STAR Market. 

It is anticipated that the A-share market will continue its upward trend in the second half of the year, with over 300 IPOs and funds totalling over 300 billion yuan to be raised for the whole year, Thomas Leung, markets leader at PwC China, told reporters at an event in Beijing on Thursday. 

Global Times