Chinese Rail Stocks Rally on Spending Optimism: Shanghai Mover

CSR Corp. and China CNR Corp. paced gains among Chinese rail-related stocks on speculation the government will increase spending on railway construction to support economic growth.

CSR, the nation’s biggest train maker, jumped 8.1 percent to 3.86 yuan in Shanghai at the 3 p.m. local-time close, while the Hong Kong-traded shares climbed 7.2 percent to HK$5.21. China CNR, the second largest, advanced 8 percent to 4.47 yuan. The Shanghai Composite Index rose 2 percent.

The government may spend more than the originally planned 650 billion yuan ($106 billion) on railway construction this year, the China Business News reported today, citing an unidentified person close to senior government officials. New high-speed rail lines could help reduce over-capacity in industries such as steel and cement, the Shanghai Securities News reported today, citing railway officials.

“Railway investment is the easiest way for the government to bolster growth every time the economy slows,” said Li Jun, a strategist at Central China Securities Co. in Shanghai.

Spending on rail may pick up in this half of the year given only one third of the annual investment target has been met, according to the Shanghai Securities News.

China Railway Group Ltd., the nation’s biggest construction company by total assets, climbed 7.3 percent to HK$4.13. China Railway Construction Corp., builder of more than half the nation’s rail links since 1949, added 7.2 percent to 4.76 yuan.

— With assistance by Shidong Zhang

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