SHARES in the aviation sector bucked the downward trend in the mainland's stock market yesterday on a report the country's two biggest aircraft manufacturers will merge next month.
China Aviation Industry Corporation I, or AVIC I, and China Aviation Industry Corp II, or AVIC II, will consolidate into a new company called China Aviation Industry Corp in July, Xinhua news agency quoted industry sources as saying.
The news of the merger sent shares of Hafei Aviation Industry Co Ltd, controlled by AVIC II, surging 10 percent to 15.48 yuan (US$2.25) and Sichuan Chengfei Intergation Technology Co soaring 10 percent to 10.34 yuan.
Xi'an Aircraft International Co rose 0.23 percent to 17.10 yuan and Guihang Automotive Components added 0.18 percent to 11.25 yuan.
The key CSI 300 Index tumbled 3.71 percent to 2,842.68 points yesterday.
News of the merger of AVIC I and AVIC II come on the heels of the formation of Commercial Aircraft Corporation of China, which is tasked with building the country's first jumbo jet.
AVIC I and AVIC II invested 5 billion yuan in the 19-billion-yuan company, which will build aircraft with a take-off weight of more than 100 metric tons or planes that can seat more than 150 passengers.
The consolidation will enhance the two companies' presence in the Commercial Aircraft Corporation of China and also integrate their resources in many projects, said an official of AVIC II.
China's research and development into large aircraft lags behind developed countries and it should integrate all scientific research and manufacturing in the aviation industry to better compete against overseas rivals efficiently, said experts with the Development Research Center of the State Council.
AVIC I is the developer of the ARJ21 jet, China's first home-grown regional jet while AVIC II makes military and civilian aircraft, unmanned aerial vehicles, engines and airborne equipment.