An investor shows his open hand signalling five at a stock brokerage in Yangzhou, East China's Jiangsu Province, August 23, 2007. [Xinhua]
China's main stock index surpassed the 5,000-point mark for the first time on Thursday, even after a couple of cooling measures were unveiled earlier this week.
The Shanghai Composite Index opened 22.76 points higher at 5,002.84 points, after three straight days of gains, including a 5.33 percent jump on Monday.
Profit-taking soon after became heavy, exerting a downward pressure. However, the index managed to finish the session at 5,032.49, an increase of 1.05 percent over the previous close, after reaching as high as 5,050.38.
The recent rally is especially spectacular given the latest domestic and global financial events.
Around the globe, major stock markets are suffering from the credit crunch arising from the sub-prime mortgage crisis in the United States.
In China, the central bank hiked interest rates on Wednesday to curb accelerating inflation and slow growth in money supply and credit.
In theory, an interest rate increase can affect the equity market in two ways. First, it will add to firms' borrowing costs, thus eroding their profits. It will also make bank deposits a more attractive alternative to investing in stocks.
Besides the rate hike, regulators also eased curbs on individuals investing overseas.
Chinese individuals can now invest in Hong Kong stocks directly after setting up a bank account with the Bank of China Ltd in Tianjin's Binhai economic zone, the State Administration of Foreign Exchange announced on Monday.
Analysts expect the loosening up of investment restrictions will drain funds away from mainland markets, albeit not too much.
The market may now consolidate around 5,000 points for the next few days or weeks, the analysts said, citing profit-taking and psychological resistance pressures.
So far this year, the Shanghai Composite Index has soared more than 80 percent since the end of 2006.
Property shares were among Thursday's best performers, with China Merchants Property Development Co jumping its 10 percent limit to 77.62 yuan. Poly Real Estate Group followed with a 7.67 percent increase to 83.2 yuan, while China Vanke went up 2.32 percent to 34.79 yuan.
Sinopec also drove up the market, rising 1.53 percent to 15.23 yuan, while China CITIC Securities jumped 5.91 percent to 94.95 yuan.
Banking shares were mixed. China Merchants Bank rose 3.1 percent to 37.55 yuan, and the Industrial and Commercial Bank of China edged up 0.43 percent to 6.95 yuan.
In contrast, the Bank of Ningbo dropped 2.02 percent to 27.6 yuan, followed by a 0.77 percent slide in the shares of Bank of Communications to 12.96 yuan.