[Company Formation | Offshore Company | Company Incorporation] Stocks rose to an eight-month high on Monday, a development interpreted by analysts as the end of the bear market that stalled markets most of last year.

The Shanghai Composite Index soared 3.06 percent to 2,311.74 points, the highest since June.

"The bear is over," said Chen Li, the head of China equity strategy at UBS Securities Co Ltd as the SCI exceeded the 2,300 level after rebounding from a low of 1,900 in early December.

A shares are expected to rise about 20 percent in 2013, Chen said.

"The dynamic price-to-earnings ratio for 2012 didn't decline, an obvious signal that the bear market is ending. And 2013 is expected to see a small bull market arrive," Chen said.

In addition, the Shenzhen stock index climbed 3.31 percent, or 298.54 points, to 9,316.27 on Monday. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong climbed 1.36 percent.[Company Incorporation USA]

Monday's rise in the Shanghai market was led by the aerospace and aviation sector with a 9.5 percent increase, followed by the brokerage sector at 5.85 percent. The banking sector also performed well, rising 3.39 percent.

In the past year, weak global market demand and China's slowing economic growth have pressured the country's stock market, hurting investor confidence.

But many analysts have said that this year will see the market rebound thanks to the economic recovery.

"The heavy-truck, cement and other mechanical engineering companies in the periodic plate will perform better in the first quarter, while the bank, property, automobile and household electrical appliances industries are also expected to raise the valuation for the whole year," Chen said.

"The largest risks we face in the next two quarters are the rapid increase in dealing amounts and the price of properties all over the country. Our largest concern is whether the restrictions on the real estate market will take effect," Chen said. The Shanghai index has increased by nearly 18 percent since Dec 3.

More than 50 stocks climbed by their 10 percent daily limit in Shanghai and Shenzhen on Monday.

The recovery has three main causes, analysts said.

The first is a speech by Guo Shuqing, chairman of China Securities Regulatory Commission.

Guo said at a conference in Hong Kong on Monday that the mainland could substantially increase the quota for foreign institutional investors to invest in domestic stocks as a means to develop the market.