Shanghai's benchmark index surged past the 3,000-mark on Monday for the first time in almost a month on the back of positive fundamental factors. These factors included positive expectations of the trade negotiations between China and the United States and the continued strengthening of the Chinese yuan.
According to analysts, the expectations of a final trade deal between US President Donald Trump and Chinese President Xi Jinping as early as November was the main factor, while the strengthening Chinese currency serves as a potent catalyst.
On Monday, the Shanghai Composite Index jumped by 1.2 percent to 3,007.88 points. This was the highest level that was reached by the index since September 16. Meanwhile, the CSI 300, which includes blue-chip companies from Shanghai and Shenzhen, surged by 1.1 percent to 3,953.254 points.
The increase in the index was partly bolstered by a rise in banking stocks in Shanghai. The ICBC saw an increase in its stock prices by 1.42 percent. The China Everbright Bank saw its stocks jump by 6.7 percent, while the Agricultural Bank of China saw its shares rise by 0.9 percent.
The rise in the mainland indexes was also mirrored in Hong Kong earlier in the week. The city's Hang Seng index closed slightly higher on Monday, with a 0.8 percent increase to 26,521.85 points. This was the highest level reached by the index since September 18.
Similar to Shanghai, Hong Kong also saw its bank and financial stocks surge earlier in the week. HSBC had gained a respectable 1.7 percent during the day, while the China Construction Bank saw its share prices increase by 1.5 percent.
Major investment firms have stated that the rise in the mainland-listed stocks was assisted by the strengthening yuan during the trading day. The yuan had risen to 7.0611 to the US dollar during that day. In support of the strengthening of the currency, Bank of America Merrill Lynch had revised its year-end forecast for the yuan from 7.5 to 7.3 against the US dollar.
Prudential Brokerage analysts have stated that the positive sentiment in the Chinese markets has continued to rise given the fact that the country's central bank is unlikely going to allow the yuan to weaken any further. Investors are also highly positive that a deal would be signed at the upcoming APEC summit, which is scheduled to take place on November 16 in Chile.
The rise of yuan has been constant, with the currency managing to grow stronger despite the weaker trade data reported by officials on Monday. China's exports fell for the second straight month in September along with a drop in total imports.
