June 10, 2016 4:01 pm JST

End of L.A.-Vegas high-speed train hits China rail shares

KAZUMI SAKURADA, NQN staff writer

HONG KONG -- Privately held U.S. company XpressWest said Wednesday it will terminate a joint venture with a consortium led by China's state-owned China Railway that was planning to build a high-speed rail line between Las Vegas and Los Angeles.

Construction had been scheduled to start as early as September. The announcement sent shares of Chinese railway operators skidding in Hong Kong on Friday, including CRRC, the country's largest manufacturer of train cars. The stock ended down 4.45%.

Other railway infrastructure companies, such as China Railway Construction and China Railway Group, saw their stock prices tumble as well.

XpressWest said the the main reason for the decision was construction delays that it blamed on its Chinese partners. It had become difficult to obtain the approvals needed to move the project forward, XpressWest said. The company said it plans to find a new partner to build the rail link.

Chinese media reported the same day that a China Railway International executive responsible for the venture told Xinhua News Agency that XpressWest was irresponsible to make such a statement while talks with CRI were still going on, vowing to defend its interests.

The decision to proceed with the project was taken before President Xi Jinping's visit to the U.S. in September 2015 as part of Xi's "going out" strategy.

Asia300

China Railway Construction Corp. Ltd.

China

Market(Ticker): HKG(1186)
Sector:
Industry:
Industrial Services
Engineering & Construction
Market cap(USD): 24,910.85M
Shares: 13,579.54M
Asia300

China Railway Group Ltd.

China

Market(Ticker): HKG(390)
Sector:
Industry:
Industrial Services
Engineering & Construction
Market cap(USD): 27,912.51M
Shares: 22,844.30M
Asia300

CRRC Corp. Ltd.

China

Market(Ticker): HKG(1766)
Sector:
Industry:
Producer Manufacturing
Trucks/Construction/Farm Machinery
Market cap(USD): 40,327.95M
Shares: 28,698.86M

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