Bank stocks head upward on preferred share reports

Banking shares are poised for a sustained rally, analysts said, as reports on Thursday said regulators will soon let qualified companies issue preferred stocks for the first time.

The China Securities Journal reported that rules will come out soon governing preferred stocks, a special class of shares that have the properties of both an equity and a debt instrument. The first issuance will happen in the second half of the year. Candidates include banks and energy companies that have a high debt ratio, according to the report.

Banking shares, the price of which has been on a low over the past two years, jumped on the news on Thursday. Industrial and Commercial Bank of China Ltd, the biggest stock in China by market capitalization, grew 1.24 percent to 3.27 yuan a share. Shanghai Pudong Development Bank, a city commercial bank based in Shanghai, jumped by 3.27 percent to 8.84 yuan a share. Only three of the 45 shares in the financial sector closed lower on Thursday.