The heavy government intervention to support Chinese share prices is paying off, for now.
For a second consecutive session stocks are soaring.
In early trade the benchmark Shanghai Composite index added 6.4%, taking its two-day increase to 11.7% which, if sustained, will mark the largest rally seen on the index since September 22, 2008.
Large-cap stocks are outperforming with the SSE 50 index of the 50 largest firms listed in Shanghai, putting on 6.6%.
The moves seen in Shanghai are being replicated in other parts of the country. The Shenzhen Composite has added 4% with the tech-heavy ChiNext index up by a similar amount.
Unsurprisingly, the CSI 300 and 500 indices, comprising the 300 and 500 largest listed firms in Shanghai and Shenzhen, have put on 6.5% and 5% respectively.
The gains in Chinese stocks are buoying regional markets with the Nikkei, ASX 200 and Hang Seng up by 0.41%, 0.71% and 1.9% respectively.
Optimism has even spread to some traders in Japan.
One equity strategist specializing in the Nikkei index was quoted by Reuters saying, "Most people think the worst is over." Isao Kubo with Nissay Asset Management spoke of the Nikkei's potential downside — which was expected to be around 19,000, telling Reuters "I don't think we'll see a further slide below that level for the time being."
China's stocks have had a rough go of late, with Chinese regulators issuing a demand that major stakeholders stop selling shares because the market had become "irrational."
The roller coaster ride in the markets reached unprecedented lows late last month, when the Shanghai Composite index saw its largest daily points drop since January 28, 2008. The crash forced Chinese policymakers to throw everything they had at the problem.
In a 2-week span at the end of June and the beginning of July, Chinese officials pushed pause on IPOs and cut interest rates — even recruiting brokerages to buy stocks backed by cash from the central bank, Reuters reports, with additional measures likely.
Some finance scholars have expounded on the reasons for the market's dichotomous behavior. Yukon Huang with the Carnegie Asia Program in Washington told the Associated Press Thursday that "The stock market has never been fully aligned with the fundamentals."
The AP noted that stocks wavered when the economy in China was booming in the 2000s. Then, as an economic downturn gained momentum during the summer last year, "the Shanghai Composite Index climbed nearly 150 percent."
Join the conversation about this story »
NOW WATCH: How much sex you should be having in a healthy relationship