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Shanghai stocks have gained by the most since last August as companies expected to benefit from the announcement of a new urban district south of Beijing soared.

Scores of stocks, particularly those in the construction and property sectors, across the Shanghai and Shenzhen exchanges traded higher by the mainland’s daily limit of 10 per cent, after President Xi Jinping’s plans for a new development area in the province of Hebei, south of Beijing.

Mainland Chinese markets were closed on Monday and Tuesday for a public holiday, making today the first opportunity investors had this month to cash in on news of the new area, which was announced on Saturday. Today’s gain helped the benchmarks recover from a six-week low, struck last Thursday.

Named Xiong’an New Area, the 100 square kilometre district is located 100km southwest of the Chinese capital and is intended to further the development of the Beijing-Tianjin-Hebei region, according to state news agency Xinhua. It will be expanded to become a 2,000 square kilometre area in the long-term.

The Shanghai Composite closed 1.5 per cent higher for its best one-day gain since August 15 last year, while the tech-focused Shenzhen Composite’s 1.8 per cent gain was the biggest since since October 10.

The CSI 300, which tracks the 300 biggest stocks across both exchanges, gained 1.4 per cent, which was its best day since February 20.

Analysts at Bank of America Merrill Lynch said they believe the Hebei plan “will likely boost the regional economy in the near term, especially in infrastructure and property investment” but cautioned “its impact on the national economy will depend on the pace of its development, about which it is too early to tell”.

Hebei state-owned bulldozer manufacturer Xuanhua Construction Machinery, was up 10 percent at its daily limit in Shenzhen at Rmb27.50 ($3.99) a share while excavating equipment maker Jikai Equipment Manufacturing rose limit-up to Rmb27.54 a share.

Hebei developer Risesun Real Estate development surged to Rmb9.59 a share as Iron pipe maker Xinxing Ductile Iron Pipes, which manufactures pipes for water and gas, jumped to Rmb5.98 a share. Jizhong Energy Resources, which generates electricity, produces and markets coal products as well as manufacturing cement, rose to Rmb7.37 a share.

Hong Kong-listed BBMG Corp surged by as much as 20.7 per cent on Wednesday in Hong Kong after closing up 34.7 per cent on Monday. The company’s Shanghai-listed shares jumped limit-up to Rmb5.13 a share.

Some companies based in the province that do not appear to have any link to construction also jumped, with Shanghai-listed ENN Ecological Holdings, a pesticides and chemicals manufacturer, also seeing a limit-up rise to Rmb15.87 a share.

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