Feb. 14 (Bloomberg) -- China rail-related stocks fell after Xinhua News Agency said Railways Minister Liu Zhijun is under investigation for “severe” disciplinary violations. Airlines and expressway operators surged.
Liu is accused of abusing his position and receiving “a large amount of money” in bribes, the official Xinhua agency said Feb. 12, citing the Central Commission for Discipline Inspection and the Ministry of Supervision. An official from the Railways Ministry’s international cooperation department, who gave her surname as Yang, declined to comment.
“The investigation has created doubt among investors about the investment boom on high-speed rail, given the huge amount of spending,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. “Airlines and toll-road operators would benefit from any reduction in rail spending because the market has been worried about the threat of high-speed railways to their passenger volumes.”
CSR Corp., the nation’s biggest train maker, tumbled 3 percent to HK$9.52 at the 4 p.m. close in Hong Kong trading. China CNR Corp., the second largest, dropped 2.7 percent to 8.73 yuan as of the 3 p.m. close in Shanghai. Anhui Expressway Co. and Shenzhen Expressway Co. both gained by the 10 percent daily limit in Shanghai, while Air China Ltd., the nation’s largest international carrier, rallied 3.9 percent.
The minister, who has held the post since 2003, has overseen plans to build a 16,000-kilometer high-speed passenger network by 2020. The country’s planned 2 trillion yuan ($300 billion) in spending will give it almost as much track by next year as the entire rest of the world, even before the network is completed.
Liu, 58, was also removed from his post as communist party chief, according to the report.
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