UpdateUS recession fears hit Asia stocks

03 March 2008 09:53  [Source: ICIS news]

(adds closing stock prices throughout)

SINGAPORE (ICIS news)--Shares of most petrochemical companies in Asia fell up to 6% on Monday in line with regional stock indexes as fears of a recession in the US and high crude oil prices spooked investors.

Japanese petrochemical majors Sumitomo Chemical, Mitsui Chemicals and Mitsubishi Chemical saw their shares plunge around 6%, more than the 4.5% loss in the benchmark Nikkei average, as they were more exposed to the global economy, said Yu Okazaki, chemical analyst at Nomura Securities.

"Investors were worried about US demand for Asia petrochemicals," he said, adding that a weak dollar would also lower earnings from the companies’ overseas subsidiaries.

Strong petrochemical demand in Asia had helped offset high crude oil prices, but raw materials were becoming too expensive to be passed on as consumption weakened, Okazaki said.

Buyers of aromatics in Asia held back on Friday despite crude rising over $103/bbl while prices for olefins such as propylene and butadiene (BD) hit peaks.

Stock indexes in Asia fell in line with the Dow Jones Industrial on Friday after US economic data confirmed a slow growth in the fourth quarter and unemployment claims rose.

Shares of South Korean majors Honam Petrochemical and SK Energy fell 2-4% while in Hong Kong, PetroChina and Sinopec lost 4-5% of their values.

Shares in S-Oil and LG Chem, however, beat the trend, said JJ Kim, chemical analyst from Woori Securities.

"The refiner is not so sensitive to strong crude prices and global credit risk as it has a good financial structure and highly efficient plants," he added.

LG Chem was supposed to be affected by high crude prices, but they were bullish about its first-quarter earnings because of their electronics business, Kim said.

In Taiwan, shares of Formosa Plastics and Nan Ya Plastics also beat the trend, rising by around 2%, but affiliate Formosa Petrochemical, a major refiner, saw its stocks dip 1.8%.

In Thailand, PTT Chemical fell 3.4%. The local index was down 0.1% after the Thai government lifted capital controls which stemmed a stock market slide.

By: Florence Tan
+65 6780 4359

< previous article(ICIS Podcast: Chemical News Central 2 November 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly