BEIJING - China's rising stock market has resulted in a sharp increase in the market capitalization of the two bourses in Shanghai and Shenzhen.

Market value of the Shanghai and Shenzhen bourses surged to 35 trillion yuan ($5.7 trillion) on Friday, up 6.9 percent from the previous week. Average prices of all stocks rose 6.93 percent over the week to 9.6 yuan.

China's stock market capitalization overtook Japan as the world's second largest after the United States last week. The Shanghai stock market was valued at 22 trillion yuan by the close of market on Friday, up 9.6 percent from the previous week. The market value of circulated stocks in the week increased 7.8 percent to 29.4 trillion yuan. Over 60 stocks on the two bourses surged by the daily limit of 10 percent.

A new world record for daily turnover was set on Friday, breaking the previous high reached only two days previously, with combined daily turnover of the two bourses totaling 1.07 trillion yuan, surpassing the previous record of 915 billion yuan on Wednesday.

Transactions on the two exchanges reached 639 billion yuan and 435 billion yuan respectively.

The rally is mainly driven by November's interest rate cut, which increased liquidity. Many institutions expect a cut in the reserve requirement ratio soon for some banks, which is expected to release more funds into the equity market.