The Shanghai Composite Index advanced 1.2 per cent to 3,740.50 at the break, a level not seen since August 19, 2015. The CSI 300 Index climbed 1.5 per cent, poised for the highest close in three years.

The yield on China’s 10-year government bond increased 3.2 basis points to 1.780 per cent, the highest in four months. In Hong Kong, the Hang Seng Index rose 0.6 per cent to 25,426.53, while the Hang Seng Tech Index surged 2 per cent.

The broadening risk-on mood on the mainland was also reflected in Shanghai’s tech board, with a key gauge surging 3.1 per cent, while a benchmark for start-ups in Shenzhen jumped 3.6 per cent. Telecoms and IT stocks were the best-performing industry groups on the broad-based CSI 300 Index, rallying at least 3.1 per cent.

“Bond yields and deposit rates are pretty low, while the wealth effect from the stock market continues,” said Amber Zhou, an analyst at Haitong International. “The rotation from bank deposits and bonds is expected to be ongoing.”

The turnaround in Chinese stocks comes after years of underperformance, with investors returning after the appeal of fixed-income products wearing off. The yield on the 10-year bond touched a record low of 1.597 per cent in January, while the interest rate on a one-year deposit only fetches 1.5 per cent. In comparison, the companies on the CSI 300 Index offer an average dividend yield of 2.5 per cent on a trailing 12-month basis, according to Bloomberg data.