China stocks up on preferred stock trial

(Xinhua) Updated: 2014-03-21 17:15

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BEIJING - Chinese shares rose sharply higher Friday on the announcement of regulations for a preferred stock trial by the country's securities regulator on Friday.

The China Securities Regulatory Commission (CSRC) Zhao Xiaojun said the trial is an important reform to China's capital market. The cabinet decided in late November to launch the trial and specific rules are now available.

The benchmark Shanghai Composite Index jumped up 2.72 percent, or 54.14 points, to finish at 2,047.62.

The Shenzhen Component Index rose 3.48 percent, or 243.37 points, to close at 7,241.57.

Combined turnover on the two bourses expanded to 228.73 billion yuan ($37.21 billion) from 209.15 billion yuan the previous trading day.

Qin Xiaobin of China Galaxy Securities said the preferred stock pilot was a major driving force in Friday's strong rally. Preferred stocks are senior to common stock in terms of dividend payment and assets, and the trial could boost direct financing, cater to diversified needs of investors and facilitate the mergers and acquisitions among enterprises.

"The market was boosted by government measures recently despite concern of a slowdown. Those measures include the urbanization plan and approval for construction of five railways by the National Development and Reform Commission," Qin said.

China's cabinet expects economic growth within a "reasonable range" and wants measures in place as soon as possible to expand the domestic market and stabilize growth.

Banks rose across the board with the Industrial and Commercial Bank of China, the nation's largest State-owned lender, rising 1.83 percent to 3.34 yuan per share; China Construction Bank, the second largest, rose 2.38 percent to 3.87 yuan. The banking sector jumped 4.39 percent.

Real Estate sector also registered strong gains with China Vanke, China's largest property developer, surging 6.66 percent to 8.01 yuan. Brokerage firms gained 4.7 percent and the coal sector went up 4.48 percent.

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