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Railway counters lead decliners in Shanghai after Mexico deal revoked

By Ye Zhen | November 7, 2014, Friday | Online Edition

SHANGHAI stocks ended lower today after rising to a two-year high as railway companies plunged after Mexico revoked a bullet train deal with a Chinese-led consortium, overshadowing gains made by brokerages on robust earnings.

The key Shanghai Composite Index edged down 0.32 percent to 2,418.17 points at the trading close, reversing from an earlier rise to 2,452.42, the highest since June 2012. Turnover was 244.2 billion yuan (US$39.8 billion). The index lost 0.08 percent for the week.

Railway companies took a hit after media reports said that the government of Mexico unexpectedly canceled a multi-billion-dollar contact to build a high-speed train line that was granted to a consortium led by China Railway Construction Corp earlier this week.

The withdrawal of the project was triggered by doubts over the fairness of the bidding process, in which China Railway Construction and its four Mexican partners was the only participant.

China Railway Construction dropped 4.9 percent to 6.73 yuan while its Hong Kong-listed shares fell 5.8 percent.

Haitong Securities said the market is going through a downward correction after continuous gains in earlier sessions, but the broker remained optimistic about the medium-term outlook, especially about shares in brokerages and military sectors.

The market decline today was narrowed by gains made by securities houses after 19 listed brokerages posted a 55 percent surge in third-quarter net profits.

CITIC Securities rose 3.4 percent to 13.63 yuan. Haitong Securities added 3.3 percent to 10.88 yuan. Industrial Securities jumped by the daily limit of 10 percent to 7.49 yuan. 

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