The recent gains in China's A shares highlight the growing role of the country's capital market in supporting high-tech and innovative companies, and fostering new quality productive forces, while the resulting wealth effect is expected to bolster investor and household confidence and stimulate domestic consumption, experts and market observers said.

The benchmark Shanghai Composite Index extended its rally on Tuesday, touching the highest level since July 2015.

The index rose 1.5 percent on Tuesday to close at 4,083.67 points. The Shenzhen Component Index gained 1.4 percent, while the tech-heavy ChiNext Index climbed 0.75 percent, reflecting continued investor interest in growth-oriented and innovation-driven sectors.

Analysts said positive factors — including potential capital inflows from both domestic and foreign institutional investors, government efforts to stabilize the economy and support the private sector, as well as development of innovative technologies like artificial intelligence — would continue to support the upward momentum of the A-share market this year.

Insurers, which are deemed as "flag bearers" of a bullish market, contributed the most to the Tuesday market gains by reporting the highest 4.22 percent increase on average. This was an encore performance to their average 6.72 percent surge the day prior.

Lu Zhe, chief economist of Soochow Securities, said that more insurance capital is expected to flow into the A-share market as bullish performance continues. Together with the influx of mutual fund capital at the beginning of the year, market liquidity will be better supported, Lu said.

More technologically advanced companies will enter the capital market by riding the current bullish tide, said Yang Delong, chief economist of First Seafront Fund. By acquiring enough financing, future tech industry leaders may be nurtured, bolstering the implementation of China's AI Plus Initiative, Yang said.

Experts from China Merchants Securities further explained that more semiconductor, AI, quantum computing, commercial spaceflight and biomedicine counters will float on the A-share market during the 15th Five-Year Plan (2026-30) period.

Standard Chartered Wealth Solutions Chief Investment Office said they are overweight on Chinese stocks this year, partly because the country said in the 15th Five-Year Plan proposal it would speed up investment in advanced technologies to further elevate national self-reliance and productivity.

An equity financing investment and financing system led by investment banking and rooted in the capital market should play a bigger role during the 15th Five-Year Plan period. It is not only conducive to advancing scitech innovation, but also helps increase people's property-based incomes, said Liu Jipeng, a senior expert on the capital markets and a professor at the Business School of China University of Political Science and Law.

Liu said the A-share market will eventually shift from a retail-dominated market to one led by institutional investors, allowing households to better build their wealth via institutional investors such as corporate annuities, the social security fund and mutual funds.

Economist Ren Zeping said A-share market value expanded from less than 70 trillion yuan to over 100 trillion yuan last year. Such enhanced wealth will help tidy up household balance sheets. Consumption recovery can be anticipated amid such a wealth effect.

Zhou Lanxu, Jiang Xueqing and Zheng Yiran contributed to this story.

shijing@chinadaily.com.cn