Hong Kong stocks also posted modest gains.

At the midday break, the Shanghai Composite index was up 0.3% at 3,739.26 points, hovering around the highest intraday level since August 2015.

China’s blue-chip CSI300 index was up 0.13%.

Hong Kong’s benchmark Hang Seng index traded 0.19% higher.

Analysts said market optimism, underpinned by the extension of the US-China trade truce and expectations of a weaker dollar, has driven increased inflows.

Last week, the US and China extended a tariff truce for another 90 days, staving off triple-digit duties on each other’s goods as US retailers get ready to ramp up inventories ahead of the critical end-of-year holiday season.

“We believe that the recent breakout in A-shares and in the HK market in July-August likely stems primarily from abundant liquidity and rising leverage,” Shujin Chen, China economist at Jefferies, said in a note.

“Local retail investors, as well as passive foreign funds have been increasing allocation to China and Hong Kong stocks,” she added.

By sector, rare-earths and liquor stocks led gains in mainland A-shares, rising 2.8 and 2.6%, respectively.

Property stocks outperformed in Hong Kong, with mainland developers listed in Hong Kong climbing 1.2%, after Chinese Premier Li Qiang called for forceful measures to stop losses in the property sector.

“With Hong Kong shares rising over 25% this year, there has been ‘mild profit-taking/position-squaring’ in the market,” said Charu Chanana, chief investment strategist at Saxo.

She expects onshore A-shares continue to find near-term support from policy and liquidity, but noted that the next leg up needs broader earnings follow-through beyond state-owned firms, especially given the softer macro.

The smaller Shenzhen index was up 0.45%, the start-up board ChiNext Composite index climbed 0.39% and Shanghai’s tech-focused STAR50 index was unchanged.