(Corrects to say CNR stock was unchanged yesterday in fifth paragraph.)
Sept. 4 (Bloomberg) -- China’s two biggest train manufacturers CSR Corp. and China CNR Corp. halted their shares from trading after Caixin magazine reported that the Chinese government wants to merge the two companies.
CSR suspended trading pending clarification of a media report, the company said in a statement to the Shanghai Stock Exchange today. Shares of both companies were halted in Hong Kong and in Shanghai. Zhuzhou CSR Times Electric Co., a CSR unit that makes railway equipment, also stopped trading of their stock in Hong Kong.
China’s State-Owned Assets Supervision & Administration Commission, or SASAC, is seeking the merger of the two companies to help the export of China’s high-speed railway technologies, Caixin reported on its website yesterday, citing people it didn’t identify. The proposal was still in an early stages because China Railway Corp., the state monopoly that owns the rail network, opposes the move, the said.
China CNR board secretary Xie Jilong declined to comment when reached by phone yesterday. Two phone calls seeking comment from CSR Corp.’s investor-relations department went unanswered.
China CNR was unchanged at HK$6.81 in Hong Kong trading yesterday, while CSR advanced 0.7 percent to HK$7.14.
China is expanding the world’s largest high-speed rail network as a tool to sustain the country’s three-decade economic boom. In December, CSR and China CNR won bids for 258 bullet trains worth as much as 44.3 billion yuan ($7.3 billion) to serve the expending network. CSR builds high-speed trains on its own and in a venture with Bombardier Inc.
An increase in China Railway Corp.’s 2014 investment budget to 800 billion yuan from a previous plan of 630 billion yuan to 650 billion yuan was “significantly higher than market expectation,” according to a May 2 note from HSBC Holdings Plc.
China is competing aggressively for overseas rail projects, targeting emerging markets, such as Africa, eastern Europe, Latin America and Southeast Asia. Premier Li Keqiang has touted the country’s rail equipment, engineering and construction companies during overseas trips, signing several deals along the way.
In June, CSR reached an agreement to sell six bullet trains to Macedonia, its first European deal.
(An earlier version of this story was corrected to fix an error in an official’s name.)
--With assistance from Jasmine Wang in Hong Kong.