SHANGHAI: Chinese stocks briefly surpassed a February peak, as a phone call between U.S. and Chinese leaders added to investor optimism that’s also been bolstered by hopes on steps to boost economic growth.

       The Shanghai Composite Index jumped as much as 0.8% to 3722.9, on track to close at the highest level since August 2015. The rally was driven by the conglomerate sector, which includes the country’s largest banks such as Industrial & Commercial Bank of China. Property developer Metro Land Corp. jumped by the 10% daily limit for a sixth straight session to be one of the best performers in the gauge.

       Traders are betting on monetary policy loosening by the People’s Bank of China in the coming months, such as a further cut in lenders’ reserve requirement ratio, to shore up China’s economic growth that’s shown signs of a slowdown. Such easing measures would unleash liquidity into the market and typically trigger positive responses from cyclical stocks.

       Mainland stocks have been less affected by China’s months-long regulatory crackdown, given the campaign’s main targets of tech giants and private tutoring firms are mostly listed overseas. Foreign investors have added to their holdings of mainland shares every month since November via trading links with Hong Kong, with August’s purchases of $4.2 billion the highest in three months.

       "The market is betting on some policy support to cope with the weak economy,” said Amy Lin, an analyst at Capital Securities Corp. Investors are snapping up property stocks given their "cheap valuation” while investment themes in the market have remained "unclear,” she added.

       President Joe Biden spoke with Xi Jinping on Thursday by telephone, with an aim to see whether personal engagement with the Chinese leader could set bilateral relationship on a more serious path, according to a senior administration official.

       China’s other key stock index CSI 300, which tracks larger companies in the nation, advanced as much as 0.6% on Friday. It is still about 14% below its February peak.

       READ: China’s Large-Cap Stocks Can’t Stop Underperforming: Chart

       The underperformance of Chinese big-cap stocks came after earnings of smaller-cap shares posted higher growth rates in the second quarter. Firms in the CSI 300 Index saw their net income rise 23% on average in the period, while their smaller peers in the CSI 500 Index reported a 44% increase, according to Guotai Junan Securities report in August. - Bloomberg