SHARES in five State-owned firms rose by their daily limit last week ahead of the companies filing potentially market-moving news, raising questions over whether the government’s plans to restructure the State sector are reaching some investors ahead of them being made public.

    Shares in top trainmakers China CNR Corp. and CSR Corp. both rose by 10 percent — the maximum allowed per trading day — March 5, hours before the firms said that their merger into an entity with combined revenue of US$32 billion had been approved by the State-owned Assets Supervision and Administration Commission (SASAC).

    Similarly, shares in State-controlled Shenyang Machine Tool Co. rose by 10 percent for two consecutive days ahead of its March 3 trade suspension announcement. And local government-owned Shanghai Bailian Group Incorporated Co. and Beijing Shunxin Agricultural Co. shares both rose by the daily limit ahead of trade suspension filings.

    “Very often domestic stock markets move ahead of formal disclosure,” said a market analyst who asked not to be named because of the sensitivity of the matter. “Obviously asymmetric information exists.”

    Beijing Shunxin said there was no leak of information ahead of its public announcement. Shenyang Machine Tool declined to comment. Shanghai Bailian couldn’t be reached for comment.

    The SASAC, the ministry-level body that directly oversees 112 Central Government industrial and services conglomerates, couldn’t be reached for comment.

    Asked if insiders may have traded shares ahead of the rail merger announcement, Zhang Xiaojun, spokesman for the China Securities Regulatory Commission (CSRC), said the regulator is paying close attention to the matter.

    “The CSRC has always taken a hard-line attitude toward insider trading and widely reported market manipulation,” Zhang told reporters late last week.

    In January, CNR and CSR denied media allegations of insider trading, saying senior executives who traded shares ahead of the merger announcement had no prior knowledge of the reorganization.

    The CSRC has said it will investigate China’s largest brokerages and fund managers, including China Asset Management Co. and HFT Investment Management Co., for alleged regulatory violations, as part of the regulator’s intensifying crackdown on insider trading. (SD-Agencies)