(Corrects China CNR's RIC in first para)
SHANGHAI, Sept 5 Shares in trainmakers China CNR
and CSR Corporation
surged on Friday after a newspaper reported the government was
looking to merge the two state-owned firms to prevent them for
undercutting each other as they chase overseas orders.
Trading in the shares of CNR and CSR was suspended after the
Caixin financial newspaper reported China's supervisory body for
state-owned companies, the State-Owned Assets Supervision and
Administration Commission (SASAC), was looking into a
Trading resumed after both CSR and CNR issued identical
statements saying they had not had received any notice from the
government in relation to a merger, but investors appeared to
shrug off the denial, sending the shares higher.
A merger would boost China's efforts to export its high-tech
train technology, analysts said.
At 0346 GMT, shares in CSR were up 2.7 percent, after rising
to their highest level since June 2011 earlier in the session.
Shares in CNR, which listed on the stock exchange in May, were
2.6 percent higher.
"Investors believe that the competition issue has drawn
SASAC's attention and there might be other forms of cooperation
in overseas markets," said UOB Kay Hian analyst Lawrence Li.
"That's why investors had a positive reaction."
CNR and CSR were created from the now-defunct Ministry of
Railways in the early 2000s to stimulate the industry. The two
companies, however, have been clashing with each other as they
chase orders abroad as part of a government push to promote its
Last year, CNR complained to the government about CSR's
aggressive pricing strategy when bidding for projects in
Argentina, many of which CSR eventually won.
The firms, who already dominate the global market by sales,
have said they want to increase their overseas sales.
CSR and CNR made 4.6 million and 2.3 billion yuan in
overseas sales in the first half of 2014, accounting for 9.2
percent and 6 percent of their revenue respectively.
Other analysts said that a full merger seemed unlikely due
to a recent push from Beijing to introduce more competition into
some state-owned dominated industries.
"Merging the two seems to be contrary to the general
direction," Daiwa analysts Kelvin Lau and Carrie Yeung said.
(Reporting by Brenda Goh; Editing by Miral Fahmy)