CHINA’S shares closed at their highest level in eight months yesterday, led by real estate, financial and commodity shares, on speculation the government is accelerating State-owned enterprise reform and relaxing rules on the property sector.

    The benchmark Shanghai Composite Index ended up 1.74 percent at 2,223.33, the highest closing level since Dec. 10, 2013, when it finished at 2,237.49. Trading volume fell to 140.1 billion yuan (US$22.7 billion) from Friday’s 151.9 billion yuan. The Shenzhen Composite Index rose 1.40 percent to 1,164.32.

    “The market may keep rising as the drivers behind the rise remain intact,” said AJ Securities analyst Hou Yingmin.

    The rebound, which started late last month, was the result of a combination of an economic recovery, ample liquidity and market-friendly policies, including the Shanghai-Hong Kong stock connect program, Hou said.

    He tipped the Shanghai index to rise to 2,350-2,400 over the next few months.

    A China Securities Regulatory Commission (CSRC) spokesman Friday described the recent rally in China’s stock market as a “rebound” due to improving performance in the economy, more liquidity and market reforms.

    “The CSRC comments are good news. Basically, the market has entered into an uptrend,” said Zhang Qi, a Shanghai-based analyst with Haitong Securities.

    “But since it has gained so much, some fluctuations in the short term are understandable. The key is still whether follow-up funds can continue to flow into blue chips,” Zhang added.

    A-share gains came despite weakness in U.S. stocks Friday due to global credit woes and uncertainty about Federal Reserve policy.

    “China’s A-share market seems insulated from rises and falls in the global markets, it only reflects the domestic economy and polices,” said Amy Lin, an analyst at Capital Securities.

    China’s efforts to cut borrowing costs could prompt investors to put their money into stocks instead of other investment products like money-market funds.

    Developers were among the top gainers yesterday amid signs that local governments were keen to loosen controls on the sector to boost sales. Sichuan Province said late last week that it would provide financial subsidies to banks that offered mortgage rates at benchmark rates or at even lower levels to first-time homebuyers, but then retracted its statement over the weekend.

    Sichuan’s capital city of Chengdu, which took down the statement, didn’t explain the backpedal, but analysts noted that its move would have been a step up from what other cities have done, which has been to loosen curbs on second-home purchases.

    China Everbright Bank Co. gained 4.51 percent and Everbright Securities Co. climbed 3.27 percent on plans for their parent company to become a joint stock company.

    China plans to revamp the ownership of China Everbright Group Ltd. in the latest shake up of State businesses. The Ministry of Finance and Central Huijin Investment Ltd., the sovereign investor that controls China’s largest banks, will inject assets in the proposed restructuring of China Everbright, a Beijing company with US$420 billion in assets from banking and broking to tourism.

    “Everbright is one good example of State-owned firms’ reform taking place and any news about speeding up of these reforms will boost the market,” said Mao Sheng, an analyst for Huaxi Securities Co. in Chengdu.

    Brokerages jumped after a China Securities Journal report said that the government plans to relax some risk management requirements on securities firms, a move that could free up capital for expansion.(SD-Agencies)