Talk of preferred stock issue lifts banks
Print Edition
Shanghai’s key stock index closed above 2,000 points as banks rallied amid speculation that China’s securities regulator will soon allow them to issue preferred shares.
The Shanghai Composite Index rose 1.1 percent to 2,019.11.
Banks benefited from reports that the China Securities Regulatory Commission will launch a pilot program to issue preferred stock as soon as this weekend.
The CSRC has been soliciting public opinion on draft rules governing preferred stock, a hybrid financial instrument that has components of both equity and debt. Holders of preferred shares enjoy priority over common shareholders in dividend payments.
Listed lenders are widely expected to be the first batch of beneficiaries from the launch of preferred shares.
The selling of preferred shares offers an additional financing tool for lenders, enabling them to meet the tougher Basel III capital requirements, according to analysts.
Shanghai Pudong Development Bank jumped 3.3 percent to 8.84 yuan (US$1.44). The Agricultural Bank of China added 3.1 percent to 2.36 yuan.
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