Shares of CNR, CSR surge after merger announcement

Stocks of China's two railway giants soared by the daily 10 percent limit after they resumed trading on Wednesday following the overnight merger announcement.

Under the merger plan, CSR Corp. Ltd. would fully acquire CNR Corp. Ltd. through a swap of the Hong Kong and Shanghai shares of the two companies -- every share of CNR will be exchanged for 1.1 shares of CSR, the state-owned companies announced late Tuesday on the Shanghai Stock Exchange website.

CSR and CNR together once controlled China's entire high-speed rail market. They have produced about 80 percent of cargo trains in China and the majority of subway trains.

The new company, which will inherit all the assets, liabilities, businesses, staff, contracts, certificates as well as all other rights and obligations of the two companies, will be named CRRC Corporation Ltd.

Shares in the two companies suspended trading since October 27.