SHANGHAI: China stocks closed higher on Friday, led by property developers and new energy shares, after the securities regulator’s chairman said the country would stabilise and reform its capital markets next year.

The blue-chip CSI300 index rose 0.4% to 4,940.37, while the Shanghai Composite Index gained 0.6% to 3,639.78.

For 2021, the CSI300 index lost 5.2%, marking its worst annual performance in three years, while the Shanghai Composite index gained 4.8%.

Annual turnover in mainland China’s markets surpassed 257 trillion yuan ($40.33 trillion), breaking a record set in 2015.

Overseas capital inflows to the mainland market also hit a record, with data from East Money Information showing the figure at 1.18 trillion yuan.

The total assets under management (AUM) of China’s mutual fund industry reached a record of 25.3 trillion yuan ($3.97 trillion) this year.

China will reform its stock market next year to adopt a comprehensive registration-based IPO system, and will try to defuse debt default risks, said Yi Huiman, chairman of China’s securities regulator.

China’s factory activity and services sector both edged up in December, even amid local COVID-19 outbreaks.

Real estate developers surged 2.9% on Friday, after a central bank official said mergers and acquisitions in the property market would help firms lower debt.

The sub-index still posted a near 19% decline in 2021 amid China’s tight regulations and a growing liquidity crisis at some indebted developers.

New energy shares rose 2.3%, with the photovoltaic industry up 3.6%. The new energy index surged nearly 50% this year amid China’s green push.

Agriculture and machinery stocks added 2.1% and 1.6%, respectively.

However, gains were capped by losses in consumer staples, with liquor makers down 1.1%.