The Ministry of Railways has raised its target for railway construction spending this year to 496 billion yuan ($78 billion) from 470 billion yuan in a move seen as part of the government's latest efforts to shore up the slowing economy.
"The investment on new railways will be at least 67 billion yuan a month from September till the end of this year," China Railway Group's President Bai Zhongren told a news conference in Hong Kong on Tuesday.
This is at least the third time this year that the ministry has raised its investment target since the start of July when Premier Wen Jiabao said promoting investment growth is key to stabilizing economic expansion that has fallen to the slowest pace in three years.
In its previous moves, the ministry has raised its spending target from 406 billion yuan to 470 billion yuan. The latest investment target (496 billion yuan) is 35 billion yuan more than last year's spending of 461 billion yuan
Meanwhile, data from the ministry showed that total investment in railway fixed assets during the first seven months of 2012 was 30 percent less from a year ago, due to fewer new projects and lack of funding.
"The Ministry of Railways will hold a mobilization meeting soon, which is very rare and it demonstrates its determination on boosting the railway construction," said Bai.
Hey Zen, just wanted to let you know that I really appreciate the posts you have been putting up regarding Midas. There is a lot of fundamental information of the rail situation in China and I decided to jump on board at just above 30 cents. Getting this stock into my portfolio has been a good stroke of luck Thanks! I thank you so much for your persistent posts.
We are reinstating our BUY recommendation on Midas after having downgraded it to HOLD in mid- July â12 as we believe that the China governmentâs announcement yesterday to approve 25 new urban railway projects worth more than Rmb800 billion in 18 cities over the next 2 years as well as increasing its railway budget for the 3rd time this year to Rmb496 billion (from Rmb 470 billion) means that it is a question of âwhenâ and not âifâ the 2-year drought in the high margined high-speed rail contracts resume.
It can be a good trading investment if purchased at the right price. One thing that shareholders should bear in mind is the greatest risk of Midas is the regulation/goverance of the rail industry in China.It will affect Midas performance directly or indirectly. E.g the safety of the high speed railway recently.
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