THE Shanghai Composite Index yesterday briefly surpassed 4,000 for the first time since 2008, extending the world’s biggest stock-market rally as investors bet authorities will increase monetary stimulus to bolster economic growth.

    The benchmark equity gauge surged to as high as 4,000.22 before paring gains to close 0.84 percent higher at 3,994.81. The index has doubled since January 2014 as traders borrowed a record amount of money to buy shares, new investors opened stock accounts at an unprecedented pace and government officials endorsed the rally. A gauge of mainland shares in Hong Kong jumped 5.8 percent for the steepest gain since December 2011.

    China’s central bank has cut interest rates twice since November and analysts predict authorities will ease policy further to keep economic growth above their 7 percent target. The nation’s individual investors, who account for about 80 percent of equity trading, may view the 4,000 milestone as a signal to boost holdings, according to Shenwan Hongyuan Group Co., the nation’s second-largest brokerage by market value.

    “Breaching the 4,000 level can be read by retail investors as a bullish signal,” said Gerry Alfonso, a director at the international business department of Shenwan Hongyuan in Shanghai.

    While the market’s rapid ascent has fueled concerns of a bubble, Shenwan Hongyuan estimates the Shanghai index may rise to 4,500 as individuals shift more of their assets into equities. The gauge is still well below its all-time high of 6,092.06 in October 2007.

    The Hang Seng China Enterprises Index in Hong Kong rallied 5.8 percent at the close, while the Hang Seng Index advanced 3.8 percent to the highest level since May 2008.

    Industrial and financial shares led gains in both Hong Kong and Shanghai. Citic Securities Co. and China Railway Group Ltd. both surged more than 4 percent. Gome Electrical Appliances Holding Ltd. jumped 35 percent in Hong Kong after Citigroup Inc. recommended the stock over its mainland rival Suning Commerce Group Co. because of cheaper valuations.

    The Shanghai Composite is valued at 15.3 times estimated earnings for the next 12 months, compared with the five-year average of 10.2. In the technology industry, the best-performing part of the market this year, shares are trading at an average 220 times reported profits, the most expensive level among global peers. (SD-Agencies)