Asia, Europe chem stocks rally after US rate cut

19 September 2007 12:25  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian and European chemical stocks rose on Wednesday following overnight gains on Wall Street spurred on by the US Federal Reserve’s larger than expected interest rate cut of 0.5%.

In Japan, Mitsubishi Chemical’s stock closed higher at 1.9%, while Mitsui Chemical saw its share price rise 3%.

Chinese major Sinopec’s share price rose 4.3% on the Hong Kong Exchange, while PetroChina’s share price was up 3.1% in Hong Kong at the close.

In South Korea, Honam Petrochemical’s stock price ended the day 5.6% higher, while SK Energy’s share price closed 5% up.

“The US [Federal Reserve’s interest rate] cut by 0.5% was very positive news for Korean investors,” said Sung-Kwon Lee, macro-economist at South Korean investment banking firm Goodmorning Shinhan, over the phone.

“It shows a high possibility of US recovering its market and consumption situation and that means Korea’s exposure to the US is likely to [overcome] the [effects of the] subprime mortgage crisis,” he added.

The Korea Composite Stock Price Index (KOSPI) closed higher by 64.04 points to 1,902.65 from the previous day. Among KOSPI stocks, 585 rose versus 227 that fell.

Japan's Nikkei 225 index was up 3.7%, to close at 16,381.5 while Hong Kong’s blue chip Hang Seng Index closed 4% up at 25,554.64.

In southeast Asia, the Stock Exchange of Thailand Index (SETI) edged up 1.3% at 09:30 GMT, while Singapore’s Straits Times Index (STI) closed to end higher at 3.2%.

Pongpan Hapinyakul, strategist at Kim Eng Securities Thailand said that the SETI didn’t do as well as northeast Asian stocks as the country was “less exposed to the US economy”.

European chemicals stocks were marginally higher with French company Rhodia marking one of the biggest jumps, up 4.66% at 12.12pm local time to €27.86 on the Euronext.

Chemical stocks were just following the market trend and were going up and the movement was to do with factors outside the chemical industry primarily the financial market, UBS analyst Themis Themistocleous said.

But it was too early to call what was going to happen to chemical stocks in six or 12 months' time, Themistocleous added.

BASF shares were up 1.3% at €96.11 on the Frankfurt Stock Exchange at 11:34am local time.

Pharmaceuticals, agrochemicals and plastics maker Bayer's shares was up 0.96% at €58.09, while Akzo Nobel shares were up 1.2% to €56.44 at 11.26am on the Euronext.

Lanxess, who announced its company’s earnings forecast on Tuesday, saw its share price follow the trend and was up 1.34% to €34 on Xentra in late morning trade.

Specialties maker DSM saw the value of its shares fall marginally by 0.06% to €36.12 on the Euronext.

Most companies were buoyed along with the European market, with the Eurostoxx 50 index up 1.98% and the Dow Jones Eurostoxx Chem index up 1.6% in late morning trading.

Nigel Davis and Lucy Craymer contributed to this story.

By: Jeanne Lim
+65 6780 4359

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