Mainland Chinese stocks returned from an extended break with a roaring start on Tuesday, scaling multi-year highs as investor exuberance over Beijing's aggressive stimulus measures showed no signs of easing.

China's stock rally could extend another 15% to 20%, Goldman Sachs says. China's equity indexes have jumped dramatically since Beijing announced major stimulus policies. Goldman highlighted still low valuations and diminishing risk as tailwinds for a continued rally.

Goldman Sachs has upgraded its expectations for Chinese stocks, telling investors that shares could go a further 20 per cent higher after a historic rally following Beijing’s pledge to do more to stimulate the economy.

Chinese stocks are on a roll relative to their US peers as optimism over Beijing’s stimulus measures triggered a dramatic rebound. If history is any guide, the rally may have a long way to go, DataTrek Research says.