Related story: Chinese stocks rally to five-year high

China's stocks soared to a five-year high on the first trading day of the year on Jan 5 as investors piled into blue-chips to extend a rally for the world's best performing equities market.

The benchmark Shanghai Composite Index jumped 3.6 percent or 115.84 points and closed at 3,350.52, while Shenzhen Component Index climbed 4.6 percent to 11,520.59.

Mining sector led the gain on Monday, with 34 stocks, including Yanzhou Coal Mining, Shenhua Energy and Datong Coal Mine Group, soaring by daily limit of 10 percent, as the government has lowered export tariff on coal since Jan 1.

Two petrol giants, PetroChina and Sinopec, surged by the daily limit amid expectation that the State-owned companies will deepen mixed ownership reform and have more freedom in gas import.

Motor sector also led the gain, as Jiangling Motors, SAIC Motor and Changan Motor soared by the daily limit and FAW and Great Wall Motor advanced more than 5 percent.

Property developers rebounded on Monday, with Poly Real Estate Group, COFCO Property and Shoukai Development rallying by the daily limit, after Beijing signaled it will make it easier for first-time home buyers to access to mortages.

"The appetite for large- and small-cap shares has switched since the fourth quarter last year," said Huang Duanqing, director of quantitative investment with Bosera Fund in a note on Dec 30, adding that finance, property, and construction sectors with lower valuations are more likely to outperform.

The institution remains bullish on companies that can benefit from going global, restructuring and reforms, according to the report.

The CSI 300 Index closed at 3,641.54 on Monday, up 3 percent or 107.84.