SHANGHAI: China is mulling the merger of two of its largest shipping companies as part of a restructuring plan for state-owned enterprises (SOEs), according to a media report.
Beijing may merge China Ocean Shipping Group, known as Cosco, the largest shipping company in the country by fleet size, with China Shipping Group, Bloomberg News reported, citing unnamed people familiar with the matter.
If not a full merger, the government could instead combine some of their businesses, the report added.
Several arms of the two giants halted trading in their shares pending an announcement on Monday in both Shanghai and Shenzhen, as well as in Hong Kong, where some are also listed.
“China’s shipping sector has been the poster boy for over-investment and overcapacity,” Bloomberg Intelligence Chief Asia Economist Tom Orlik told Bloomberg News in an email in the Friday report.
“Any restructuring which addresses that problem would be a step in the right direction.”
China has already merged its top two train makers—China CNR Corp and CSR Corp—which are also state-owned, into the single conglomerate CRRC Corp.
The move, announced in December, aims to prevent competition between the two as China vies for lucrative rail contracts overseas against industry giants such as Germany’s Siemens and Bombardier of Canada.
Merger speculation surrounding other major state-owned enterprises (SOEs) has intensified as the world’s second-largest economy tries to reform the government-backed heavyweights that dominate its economy to boost stalling growth.
The official Xinhua news agency reported in April that China was considering merging scores of its biggest SOEs to create around 40 national champions from the existing 111.
Total revenue from national SOEs dropped 7.1 percent year-on-year to 13.21 trillion yuan ($2.16 trillion) in the first half of 2015, data from the finance ministry showed.
The merger speculation helped the Shanghai stock market close up 4.92 percent on Monday.