CHINA’S shares closed at their highest since December yesterday, on growing bets that the world’s second-largest economy has turned a corner and as investors expect more growth-friendly policies.

    Helped by some ultra cheap valuations, banks soared after reports said Bank of Communications Co. (BoCom), the country’s fifth-biggest bank by assets, planned to seek more private investors.

    The benchmark Shanghai Composite Index ended up 2.41 percent at 2,177.95, the highest closing level since Dec. 13, when it finished at 2,196.07. Shanghai stocks have gained 6 percent in the last five sessions. Trading volume surged to a 10-month high of 180.4 billion yuan (US$29.1 billion). The Shenzhen Composite Index rose 2.01 percent to 1,133.83.

    Analysts said the upward trend might extend in coming weeks as encouraging economic indicators have sparked broader interest in blue chips with low valuations. But short-term corrections could set in following recent steep gains, they said, tipping 2,200 as initial resistance for the Shanghai index.

    The rally in the markets, which began last week, gathered steam yesterday and has been helped by a slew of recent optimistic news that has propped up emerging market indices.

    Better-than-expected China July HSBC flash manufacturing index, lower financing costs, loosening curbs on property policies and the coming investment connection between the Shanghai and Hong Kong stock markets were cited as factors behind the rally.

    BoCom plans to sell stakes to private investors under a government reform aimed at letting private capital play a bigger role in the economy, reports said over the weekend.

    BoCom jumped 9.9 percent in Shanghai, its biggest daily gain since September 2013. China Minsheng Banking Corp. jumped 6.09 percent and Industrial & Commercial Bank of China added 2.27 percent on its plans to raise as much as US$12.9 billion through a preferred share offer, which it revealed Friday. (SD-Agencies)