Asian petchem stocks fall on recession fears

18 September 2008 08:41  [Source: ICIS news]

SINGAPORE (ICIS news)--Shares of petrochemical stocks in Asia tumbled on Thursday as growing fears of a global recession battered the markets all over the world following the major shake-up in the US financial system this week.

The collapse of Lehman Brothers, the take-over of Merrill Lynch by Bank of America and the $85bn dollar rescue of insurance behemoth American International Group flayed investors’ nerves as these events just heightened the risk of a severe global economic downturn.

 "The financial markets globally are under quite a lot of heat," said Vishnu Varathan, economist at consultancy firm Forecast.

The plunge into recession will "depend on how the credit [crisis] can be contained at this juncture," he added.

Asia’s vulnerability lies in its reliance on exports as a key growth engine and its dependence on US as a major market.

Dow Industrial set the tone for the market rout, shedding 4.06 points on Wednesday after AIG’s bailout by the Federal Reserve.

The move left many investors wondering about which financial institution would topple next, analysts said.

"In the coming weeks or months, markets are likely to remain very edgy," said Thomas Lam, treasury research analyst at United Overseas Bank. "The odds of continued volatility remain high."

Trade in petrochemicals had been sluggish for months due to weak demand as people cut back on consumption and the industry may be in for its worst downturn since the Asian financial crisis of 1997, analysts said.

At 14.05 local time (0605GMT), Japanese chemical major Asahi Kasei slipped 3.89%.

 

Chinese state-owned refiner PetroChina slumped 10.5% and Sinopec  fell 9.3% as Hong Kong’s Hang Seng Index was down 7.4 percent at 16,336.16 at the close of the morning session.

 

In South Korea, LG Chemical  eased 0.4% and Hanwha Chemicals down 1.82%,  SK Energy was off 0.45%.

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By: Pearl Bantillo
+65 6780 4359

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