Preferred shares news helps market

Shanghai stocks edged up yesterday as property developers and financial firms gained after the securities regulator allowed blue-chip companies to issue preferred shares.

The Shanghai Composite Index added 0.91 percent, or 18.66 points, to 2,066.28.

But the market's rebound was restrained by the latest flash HSBC China Purchasing Managers' Index which fell for a fifth straight month to 48.1 in March, down from February's final reading of 48.5. A reading below 50 means contraction.

The preliminary reading for China's manufacturing activity fell to an eight-month low.

The China Securities Regulatory Commission last week unveiled rules allowing 50 blue-chip stocks on the Shanghai bourse to raise funds by selling preferred shares under a trial.

Other listed firms can also issue preferred shares if the proceeds are used to pay for acquisitions and buybacks, the CSRC said.

"Preferred shares offer an attractive funding channel for the property sector that is facing rising funding costs," Tian Shixin, analyst with BOC International, said in a note yesterday.

Poly Real Estate Group gained 3.5 percent to 7.45 yuan (US$1.20). China Fortune Land Co surged by the daily limit of 10 percent to 28.35 yuan. Gemdale Corp added 1.2 percent to finish at 6.67 yuan.