Chinese mainland stocks soared on Aug 19 as a major interest rate reform unveiled by the central bank over the weekend lifted investors' expectations for more liquidity in the market and lower financing costs for businesses.

Market sentiment was also boosted by a guideline issued by the central authorities on Aug 18 to develop Shenzhen into a world-class city and a demonstration pilot zone with high-quality growth and strong innovative power.

The benchmark Shanghai Composite Index gained 2.1 percent to close at 2883.1 points, its best performance since early July. The Shenzhen Component Index gained by 2.96 percent while the ChiNext Index on the Shenzhen bourse, which tracks startups and innovative firms, rallied by 3.5 percent.

The market gain on Aug 19 was mainly led by technology firms, securities brokerages and companies based in Shenzhen.

The latest set of supportive measures announced by policymakers in Beijing has clearly injected excitement in the A-share market, which has been weighted by worries about a slowing economy growth and the ongoing trade conflict between China and the United States, analysts said.

The interest rate reform lifted market expectations of more monetary easing in the short term and the market-oriented reform is expected to reduce financing costs for businesses, which will benefit overall economic growth, Fei Xiaoping, an analyst at Dongguan Securities, said in a research note.

The People's Bank of China said on Aug 17 that it will improve the mechanism of the loan prime rate - the price of loans banks offer to their best clients - and use the mechanism as the reference rate for business and household loans. The move was broadly seen as China's effort to give the market a greater say in setting prices and to lower the real interest rate for companies.

"The rate reform will help reduce borrowing cost for companies so that they can expand investment and production. It will also help improve corporate profitability," said Yu Ke, an analyst at Guoyuan Securities.

The central authorities' decision to support the development of Shenzhen also boosted the prices of technology companies on Aug 19 as Shenzhen is the home of many high-tech and innovative firms.

The guideline also said that it will explore the registration-based initial public offering system on the startup board in Shenzhen and will support the city in carrying out foreign exchange reform and accelerate the internationalization of the renminbi.

Ma Tao, an analyst at Caitong Securities, said that investment opportunities could emerge from technology sectors including 5G, artificial intelligence and life science as the guideline from the central authorities will help strengthen Shenzhen's advantage as the leading technological and innovation hub for the country.

An index that tracks major securities brokerages also soared by 6.9 percent on Aug 19 as investors believed that a market rally will benefit securities firms.

The securities regulator has expanded the number of stocks qualified for the margin trading and short selling business of the securities brokerage and has relaxed margin financing rules. The decision became effective on Aug 19, which also helped lift the stock prices of securities firms.