The Chinese stock market boom is "led by the huge amount of liquidity", said Sanft. Part of the funds that have been rushing into the stock market in recent months were channelled from bank deposits and other investment markets, including commodities and gold.

The sectors that have benefited most from the stock market rally include services and capital goods.

Within the services sector, banks have done particularly well. The share price of the Industrial and Commercial Bank of China, for instance, has gone up a total of 78 percent from its debut in October 2006. It closed at 6.05 yuan yesterday, down from 6.20 last Friday.

Currently there are seven banks listed on the stock exchange. Three more are expected to obtain a listing in 2007. "The banking sector will remain a focus for the stock market," said Gao Yuan, an analyst at Everbright Securities.

Zhang Yidong, an analyst at Industrial Securities, agreed. "Product innovations will help banks to do well in the coming years," he said. What's more, the lowering of the corporate tax to a unified rate of 25 percent from 33 percent in the past should benefit the financial industry the most, Zhang added.

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