UpdateAsia stocks fall on US banking troubles

17 March 2008 09:50  [Source: ICIS news]

(adds UBS comment and closing prices throughout)

SINGAPORE (ICIS news)--Asian stock markets fell across the region on Monday as worries of economic troubles from the US subprime crisis deepened on the near-collapse of 85-year-old investment bank Bear Stearns late last week.

JPMorgan Chase agreed on Sunday to buy Bear Stearns for a rock-bottom $240m (€153.6m) in a stock-swap deal. Efforts from the US Federal Reserve to rescue the country’s fifth largest investment bank got investors worried that more bank troubles could follow.

In Asia, the buyout coupled with a weaker dollar and record crude oil prices caused indexes across the region to fall by up to 5%. Most rebounded on Monday’s close, except for Hong Kong, narrowing the day’s losses.

Petrochemical stocks also slid with Sinopec, PetroChina, Shin-Etsu Chemical, SK Energy, Daelim Industrial and Sumitomo Chemical recording huge falls.

Shares of Sinopec, which fell 9.1% on Monday morning, rebounded slightly to an 8.1% loss in the afternoon after UBS upgraded the stock to buy.

Fears of a possible refining loss on government price controls have been overdone, causing its share price to fall in recent weeks, the bank said in a research note.

It added that Sinopec could announce that it received government subsidies when it releases its 2007 financial earnings on 7 April.

PetroChina fell 6.6% in Hong Kong while South Korea engineering major Daelim Industrial was down 5.7%.

A record yen against the dollar hurt export-oriented Japanese producers Shin-Etsu and Sumitomo Chemical, causing their shares to fall 4-5%.

Taiwanese majors Formosa Petrochemical Corp, Formosa Plastics and Nan Ya Plastics were also down around 0.5-1.8% on Monday.

($1 = €0.64)

By: Florence Tan
+65 6780 4359

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