China's top securities regulator said the domestic stock market's surge in the first half of 2009 was in line with improving economic fundamentals, state media reported Wednesday. The market's performance this year has been in close step with economic fundamentals, Shang Fulin, chairman of the China Securities Regulatory Commission, said in remarks in the Shanghai Securities News. The key Shanghai Composite Index gained 63 percent in the first six months of the year to become the world's best performing major market. It plummeted 65.5 percent last year as the global financial crisis kicked in. His comments contrasted with some analysts' views that the market's rise was based more on sentiment than economic fundamentals. Experts have also said stimulus loans being used illegally to speculate on stocks played a role too. Shang, who spoke at a meeting for regulators and industry leaders, said the government's stimulus plan, flush liquidity and improving expectation all extended support to the stock market in the first half. Shang added that as China's economic recovery was not firmly grounded yet, 'it may take a long time to address the difficulties and complex situation' as the global financial system recovers from the crisis. Looking ahead, Shang said China would step up the preparations for a Nasdaq- style second board in the second half and enforce an improved mechanism for initial public offerings, or IPOs. China's securities regulators halted IPOs in September due to worries that pressure on liquidity would worsen the already ailing domestic stock markets. It lifted the ban after unveiling revised rules for IPOs, which include clauses to increase retail investors' participation in new share offerings. Guilin Sanjin Pharmaceutical, the first firm to launch a domestic IPO since the 10-month moratorium, said Wednesday the retail tranche of its new shares drew heavy demand and was 584 times subscribed. 