Shares of listed arms of China's two shipping giants posted sharp slumps after the State-owned Assets Supervision and Administration Commission announced a restructuring between the assets of China Ocean Shipping (Group) Co (COSCO) and China Shipping (Group) Co (China Shipping).
The shares of COSCO's Hong Kong-listed flagship China COSCO Holdings Co plummeted by 27.94 percent to close at HK$3.56 ($0.46), and the shares of China Shipping's Hong Kong-listed subsidiary China Shipping Container Lines Co dropped 26.37 percent to close at HK$2.29.
COSCO Pacific, another subsidiary of COSCO, saw its share price fall 17.32 percent, while the share price of China Shipping Development Co surged 8.2 percent.
Share trading of those listed units had been halted since August and resumed on Monday.
The State Council, or China's cabinet, has approved the restructuring of the country's two biggest shipping conglomerates, according to a post on the website of the commission on Friday. This would create the largest oil tanker fleet in the world and the fourth-biggest container line, the Xinhua News Agency reported Friday.
The move will improve the competitiveness of major Chinese shipping lines by creating synergies, as the global shipping industry faces a long-term downturn, according to the Xinhua report.
Analysts said the share performances partly reflected a weak outlook in the container shipping industry.
The merger involves a massive reshuffling of central government-controlled assets just as consolidation of industries dominated by the country's State-owned firms gathers speed. The government has already driven the mergers of its two biggest nuclear power firms, top two rolling-stock producers and two metal companies.
