China CNR Corp led gains in shares of Chinese companies that build and supply equipment for railways on speculation they will win contracts for the construction of Thailand’s high-speed train system.
In this handout photo taken on Oct 12, 2013 shows Prime Minister Yingluck Shinawatra talks with Chinese Premier Li Keqiang during an exhibition of high-speed railways at Queen Sirikit hall. (AFP photo)
China CNR, which produces passenger cars and wagons, rose by the 10% daily limit in Shanghai to 4.59 yuan, the biggest one-day gain since February 2013. CSR Corp, which makes locomotives and cars, and Taiyuan Heavy Industry Co, a maker of train axles, also surged by the daily limit. China Railway Construction Corp rose 7.4% and China Railway Group Ltd climbed 8.1% at the mid-day trading break. China's benchmark Shanghai Composite Index (SHCOMP) rose 0.5%.
The shares gained after Prime Minister Yingluck Shinawatra told reporters on Oct 11 after meeting with Chinese Premier Li Keqiang in Bangkok that Chinese train companies had expressed interest in developing the southeastern Asian country's high-speed train system. China and Thailand signed six initial agreements during Li's visit last week covering cooperation in technology, energy, environment and culture.
Ms Yingluck's comment triggered "event-driven sentiment on the railway stocks," Wu Kan, a Shanghai-based fund manager at Dragon Life Insurance Co, which oversees US$3.3 billion, said by telephone. "Besides the fact that railway investment is an effective way to boost domestic demand, the government is now also adopting a 'going out' strategy for the railway industry to boost their competitiveness. That'll boost the sector in the medium and long term."
Thailand and China earlier signed a railway cooperation agreement including construction of high-speed lines when MsYingluck visited Beijing last year, according to the official Xinhua News Agency.
The first phase of Thailand's high-speed train system includes total investment of 400 billion baht ($12.8 billion). China, Japan, South Korea and France expressed interest in bidding for contracts to build the network, according to the report.