Mainland and Hong Kong stocks jumped on Monday, led by the rare earth and property sectors, extending the recent bull run as abundant liquidity continued to fuel gains.

The benchmark Hang Seng Index surged 490 points, or 1.94 percent, to end the day at 25,829.

The tech index rose 3.1 percent while the Chinese H-share index listed in Hong Kong rose 1.9 percent.

On the mainland, the benchmark Shanghai Composite Index ended up 1.51 percent at 3,883, bringing its gain since the most recent low in April to over 25 percent, while the Shenzhen Component Index closed 2.26 percent higher at 12,441.

In a sign of surging market enthusiasm, the combined turnover of these two indexes stood at 3.14 trillion yuan, up from 2.55 trillion yuan on Friday, marking the second-highest level on record since October 8, when Beijing's stimulus package ignited a market-wide rally.

Stocks related to non-ferrous metal and brewing industries led gains while stocks related to ceramics and motorbikes suffered major losses.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, gained three percent to close at 2,762.

The blue-chip CSI300 index added 2.1 percent to 4,469, surpassing the previous intraday peak made in October to reach the highest level since July 2022.

Leading gains, the property sector jumped five percent as Shanghai became the latest mainland city to relax home-buying restrictions.

Developer China Vanke surged by as much as the 10 percent daily limit.

The rare earth sector rallied 6.5 percent to its highest level since late 2021, following Beijing's announcement on Friday of new measures to tighten control over supply.

The semiconductor sector added 1.8 percent at close after rallying nearly six percent in early trades.

Chipmaker Cambricon Technologies jumped 11.3 percent to a fresh record high.

"We see the rally continuing on abundant domestic liquidity from deposit migration, fund issuance, and insurance fund buying," analysts at HSBC Qianhai said in a note.

The firm also lifted the end-2025 targets to 4,000 for the Shanghai index and 4,600 for CSI 300, suggesting an upside potential of between five and seven percent.

Many equity investors believe maturing household deposits are flowing back into equities amid lower rates and rising market optimism, Goldman Sachs noted.

"There is rising conviction that the market retains significant potential to break previous highs."

Monday's rally also came after the head of the US Federal Reserve hinted that cuts to interest rates may be on the way.

Fed chair Jerome Powell on Friday said in a speech to an annual conference in Jackson Hole, Wyoming, that he's seen risks in the US labour market.

That followed a surprisingly weak report on US job growth this month that has led many traders to expect a rate cut as soon as the Fed's next meeting in September.
(Agencies/Xinhua)