Despite warnings of bubble like conditions, Shanghai's benchmark CSI 300 index closed up 2.6% on Monday, settling at 4,090.57. This is the first time the CSI 300 has closed above the 4,000 mark.

Last week, former US Federal Reserve chairman Alan Greenspan warned that the Chinese stock market could undergo a dramatic correction.

The BBC reports that one of the main factors behind the surge in shares has been a willingness among ordinary people, such as students and pensioners, as well as investors and businesspeople, to buy shares.

According to industry figures, 300,000 people a day opened brokerage accounts in China last week.