BEIJING -- Chinese shares rallied strongly on Wednesday, with the key benchmark Shanghai Composite Index rising 1.48 percent, or 31.6 points, to finish at 2,160.46.

The Shenzhen Component Index surged 1.84 percent, or 154.44 points, to finish at 8,553.37.

Combined turnover on the two bourses shrank to 194.9 billion yuan ($31.7 billion) from 246.9 billion yuan on the previous trading day.

The market was boosted on reports that the nation's top securities regulator would launch a system of preferred stock as soon as possible. Many firms in sectors including banking, electricity and energy have been preparing to promote preferred stocks, which are senior to common stock in terms of preference in dividends payment and assets.

Heavyweights in electricity and oil led the rebound with Huaneng Power International, Inc. rising 5.22 percent to 5.85 yuan per share.

PetroChina, the nation's largest oil and gas producer, rose 2.23 percent to 7.78 yuan per share. Sinopec, the nation's top oil refiner, surged 3.46 percent to 4.49 yuan. Sinopec announced Tuesday that its net profits in the first three quarters of the year rose 22.11 percent year on year to 52.3 billion yuan.

The China Securities Journal reported earlier on Wednesday that monopolies in China's energy sector are coming to an end, with more private capital to be allowed to exploit oil and gas resources.

Shale gas stocks also jumped on Wednesday after the National Energy Administration announced the nation will encourage shale gas exploration and development. Shandong Polymer Biochemicals Co Ltd. jumped by the daily limit of 10 percent to close at 7.58 yuan.