Chinese mainland stocks advanced the most among emerging markets in Asia as raw-material producers rose on expectations that a campaign to reduce overcapacity will support prices and smaller companies rallied.

The Shanghai Composite Index added 1.5 percent at the close. China Shenhua Energy Co and Angang Steel Co rallied after the National Development and Reform Commission said the nation will further cut capacity in the coal and steel industries. Kweichow Moutai Co, the biggest maker of baijiu liquor, rose to a record after a brokerage forecast industry shares could climb 20 percent. The ChiNext index of smaller companies in Shenzhen jumped to a three-week high amid speculation an exchange link with Hong Kong will start soon.

The advances came amid optimism that mainland companies will be able to withstand the fallout from the UK's vote to leave the European Union, which has roiled markets around the world and erased more than $2.5 trillion in equity values. The markets have overreacted to the so-called Brexit and need to calm down, China's Finance Minister Lou Jiwei said in Beijing over the weekend.