China stocks posted another day of solid gains on Tuesday as investors, joining a renewed surge in tech shares, shrugged off concerns over this week's large batch of initial public offerings (IPOs). The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 1.7 percent, to 5,161.87, and the Shanghai Composite Index also gained 1.7 percent, to 4,910.53 points.
The indexes, which soared nearly 5 percent on Monday and were flat at midday Tuesday, have regained most of the ground lost in last Thursday's sell-off, making that plunge of more than 6 percent a blip in the mainland market's seven-month-long bull run. ChiNext, the tech-heavy growth board, surged 4.5 percent to a fresh record, injecting vigour into a market facing short-term liquidity pressure.
Eleven companies, including nuclear giant China National Nuclear Power Co Ltd, started taking IPO subscriptions on Tuesday, while another 12 firms will begin on Wednesday. The flood of IPOs is expected to lock up 8.3 trillion yuan ($1.34 trillion) of cash, much more than previous batches did, according to Xinhua news agency. But the market has ample liquidity to handle the fresh wave of share sales. Chinese mutual funds raised more than 800 billion yuan during January-May, double the amount raised in all of 2014. The outstanding amount of margin financing hit another record at 2.07 trillion yuan on May 29, according to the latest data.
The Shenzhen market, home to start-up firms and small- and medium-sized enterprises, was much stronger than the Shanghai market on Tuesday. Infrastructure stocks rose on news that the Shanghai Stock Exchange and the China Securities Index Co Ltd will jointly launch an index tracking stocks related to China's "One Belt, One Road" initiative on June 24. Analysts say the sector also benefits from the central bank's recent move to provide Pledged Supplementary Lending (PSL) to select banks, part of Beijing's efforts to support longer-term investment amid a slowing economy.