Chinese shares rose to an 18-month high on Tuesday, with steel firms gaining on hopes that new government regulations will bring additional investor dollars into the sector.
The benchmark Shanghai composite index rose 0.47 percent to end at 1,385.114 points, its highest level since October 13, 2004, when it closed at 1,386.721 points.
Although more shares lost ground than gained, the winners scored strong performances on the back of upbeat regional markets and expectations of new investment in China's best firms.
"Those stocks that rose, rose by a lot," said analyst Cao Jianming, of Orient Securities in Shanghai. "The main reason is the Hong Kong markets, which came back very strong after the holidays, and the record highs on the commodity markets which pushed some base metals shares up sharply."
Hong Kong's blue chip Hang Seng Index closed up 1.14 percent on Tuesday, while the index of Hong Kong-listed Chinese shares hit its highest level in eight and a half years.
A series of announcements by Chinese regulators, starting last week, laid the groundwork for banks and other firms to invest overseas on behalf of domestic investors, and for resumption of capital raising on China's domestic exchanges.
Top Chinese steel maker Baoshan Iron and Steel Co Ltd (Baosteel), which is due to post first-quarter results next Monday, rose 2.74 percent to 4.5 yuan.
Maanshan Iron & Steel Co Ltd rose 4.56 percent to 2.98 yuan, catching the wind of a 4.8 percent gain by its parent's Hong Kong-listed unit.
Asia's largest refiner, Sinopec, edged up 0.36 percent to 5.52 yuan. It has led a broader market rally since December 1, jumping 34.3 percent during that period.
The Shanghai index has jumped 19 percent this year, as new steps have renewed investor interest following a four-year slump.