SHARES in trainmakers China CNR and CSR Corp. surged Friday after a newspaper reported the government was looking to merge the two firms to prevent them from undercutting each other as they chase overseas orders.

    Trading in the Shanghai-listed shares of CNR and CSR was suspended Thursday 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 merger.

    Trading resumed Friday 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.

    Shares in CSR closed up 2.11 percent, after rising to their highest level since June 2011 earlier in the session. Shares in CNR were 2.54 percent higher.

    “Investors believe that the competition issue has drawn the 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 high-speed technology.

    (SD-Agencies)