CNR Corp Ltd's stand at the 18th China International Fair for Investment and Trade in Xiamen, Fujian province, on Sept 8, 2014. The company is one of China's two largest locomotive makers. [Provided to China Daily]

Chinese train makers China CNR Corp Ltd and CSR Corp Ltd halted trading of their shares on Thursday, the first step in a merger process expected to create the world's biggest rail conglomerate in terms of sales.

The state-backed firms, which are already the world's biggest in terms of sales and which currently have a combined market capitalization of $113 billion, said in stock market filings the halt would last until the merger was completed, but did not specify a date.

Late last year, they announced merger plans and said they would rename the combined company China Railway Rolling Stock Corp, which analysts said would compete on a global scale with the likes of Siemens AG and Alstom SA.

Analysts also say the government-directed merger is one of the first chapters in Beijing's plan to overhaul China's underperforming state sector.

Under the deal, CSR will issue shares to CNR's shareholders, with a swap ratio of one CNR share for 1.1 CSR share. CNR will delist from Shanghai and Hong Kong stock markets.

The trading halt will give both firms' existing shareholders the chance to exercise options to sell their shares that were offered when the deal was first announced.

CNR's H-shares closed at $15.86 on Wednesday while CSR's closed at HK$15, giving them a combined market capitalization of HK$875.75 billion ($112.97 billion)

Last month, Reuters reported that CNR and CSR have been in talks with Bombardier Inc on buying a controlling stake in the Canadian company's railway unit, but that discussions cannot progress until the merger's completion.