SHANGHAI, Dec. 3  -- The Chinese stock market continued its upward trend on Wednesday, pushing combined turnover in Shanghai and Shenzhen to a historical high of 914.9 billion yuan (about 148.8 billion U.S. dollars).

The Shanghai Component Index rose 0.58 percent on Wednesday at 2779.53 points while the Shenzhen Component Index jumped 2.96 percent to 9643.92 points. The Shanghai benchmark surged 3.11 percent to a three year high on Tuesday.8 Commodities producers led the surge on Wednesday while six new stocks in the Shanghai Stock Exchange all hit their first day limit of 44 percent of offering price.

Volatility widened to 3.27 percent at the Shanghai bourse on Wednesday, with the benchmark taking a dip in the afternoon trading as banks and brokers pared previous gains. More than 5.3 billion yuan flowed into these stocks amid Tuesday' s surge, sending shares of several banks and brokers to the daily trading limit of 10 percent.

"Chinese banks and brokers have long been undervalued," said Chen Jiahe, chief strategist at Cinda Securities. "Investors are taking money out of these stocks after a week-long rally following the central bank' s rate cut."

The stock market's rise on expectation of easing liquidity conditions has defied weak economic fundamentals. Both the private and official PMI figure have pointed to slowing factory activities in November, though partially affected by a one-off impact of the production halt during the APEC summit in Beijing. Industrial profit growth also slowed 2.1 percent from a year ago in October.

Despite the rally on the mainland bourses, foreign investors are pulling their money out of exchange-traded funds (ETF) in Hong Kong.

As of the last trading day of November, more than 845 million dollars have left the CSOP FTSE China A50 ETF, the largest capital outflow since the 5.7 billion-dollar fund's inception in 2012. Meanwhile, 585 million dollars have flown out of the 9.7 billion iShares FTSE A50 China Index ETF.

"It can't be said at the moment that investors are reducing their exposure to Chinese stocks. Funds could flow instead to the Shanghai-Hong Kong Stock Connect after leaving these ETFs to gain more direct exposure to China A-shares," Chen said.

The People's Bank of China's surprise cut in interest rate on November 21 has triggered an extended rally in the stock market. The Shanghai benchmark has risen 13.8 percent since November 20.

The extended rally has many analysts predict that China is set to embrace a bull market. Trading volume in the Shanghai Stock Exchange have doubled to more than 500 billion yuan on Wednesday, compared with less than 200 billion when the rate cut was announced.

Data compiled by China Securities Depository and Clearing Corp. also shows that more than a million new A-share stock accounts have been added in November, with some 370,000 accounts opened during the last week of November, the most in 43 months.

The extended rally in blue chips stocks has lifted domestic investors' sentiment. Goldman Sach's predicted that more than 400 billion yuan will be leaving the property market and flow into the stock market as over-supply in the domestic property market have snapped growth of home prices.