Train Derailment: Difficult Day for Bombardier in Stock Market

The leading railway and aviation manufacturer Bombardier was down 2.94% on Monday after the fatal collision between two high-speed trains built by a joint venture between the Canadian and Chinese company Southern Locomotive.

On the TSX, Bombardier (TSX: BBD.B) closed at $ 5.94, falling 2.94% or 18 cents. In the morning, it once fell by more than 5%.

The accident, which caused 36 dead and 192 injured Saturday on the line connecting Beijing to Fuzhou, questioned the reliability of the Chinese high-speed rail, whose growing network has passed 8358 km by the end of 2010 and to expand to 13000 km by 2012, then 16000 km in 2020.

The causes of this railway accident, the worst in China since 2008, are still under investigation by the Chinese Ministry of Railways.

While the train was stopped on a bridge due to the failure of its power system after a storm, a second train struck from behind, probably due to the defect of signaling system, according to Xinhua news agency.

“We expect that the share price of Bombardier is down today because of the uncertainty surrounding the accident,” said Monday the analyst Benoit Poirier of Desjardins Securities in a note to investors.

“The trains were built by a joint venture between Bombardier and China Southern Locomotive, while the signal system was manufactured by General Electric,” said Poirier.

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