Stock market. Photo:VCG

Chinese A-shares and the exchange-traded funds (ETFs) that track them continued to surge on Wednesday morning, buoyed by the financial stimulus announced on Tuesday aimed at ramping up economic growth. 

The Shanghai Composite Stock Index jumped past the 2,900-point mark, rising by more than 1.7 percent, while the Shenzhen Component Index gained 2.36 percent at the close of the morning session. 

The rally was led by finance, steel, and real estate sector shares.

The total trading volume across the Shanghai and Shenzhen exchanges exceeded 500 billion yuan ($71.25 billion) as of 10:15 am, an increase of nearly 230 billion yuan from a day ago.

The rally followed a surge in Chinese stocks traded on the US market on Tuesday, with the NASDAQ Golden Dragon China Index jumping by 9 percent, marking its largest single-day increase since 2022.

Meanwhile, the offshore yuan strengthened against the US dollar, breaking the 7:1 milestone for the first time since May 2023, rising as high as 6.9951 yuan per US dollar on Wednesday. 

The surge in trading activity indicates heightened investor confidence, fueled by Tuesday’s announcements of a new round of monetary stimulus to bolster economic stability and growth, market analysts said.

On Tuesday, People's Bank of China governor Pan Gongsheng announced plans to lower bank borrowing costs, inject more liquidity into the economy, and cut interest rates on existing mortgages. The stimulus includes a planned 50-basis-point cut to banks' reserve requirement ratio and the establishment of new monetary policy tools aimed at stabilizing the stock market.