Chinese rail stocks hammered after US firm calls off high-speed train deal
Chinese railroad stocks plunged in Hong Kong on Friday after a US company called off a deal with China to build a high-speed rail link between Los Angeles and Las Vegas, which would have been the first high-speed rail system in the US ever built by Chinese companies.
Shares of China Railway Construction, the country’s largest railroad construction and engineering company, sank 5.4 per cent to close at HK$9.45. Rival China Railway Group also declined 4.8 per cent to end at HK$5.81. CRCC Corp, state-owned rolling stock manufacturer, lost 4.5 per cent to close at HK$7.08.
Las Vegas-based XpressWest said late Wednesday US time that it planned to terminate the relationship with China Railway International (CRI) to build the high-speed rail line, due to difficulties in meeting the federal government’s requirement that high-speed trains must be manufactured in the US. The US firm formed a joint venture with CRI, a consortium established by a group of Chinese companies, in September.
“Our ambitions outpace CRI’s ability to move the project forward timely and efficiently,” Tony Marnell, chief executive of XpressWest said in a statement.
This story was updated to reflect Friday’s share closing prices.