UpdateAsia bourses buckle as finance storm rages

08 October 2008 12:31  [Source: ICIS news]

(Adds closing petrochemicals stocks prices/analysts' comments)

 

SINGAPORE (ICIS news)--Asian markets tumbled, closing at multi-year lows and chemicals stocks dived on Wednesday as nervous investors scurried to unload shares amid fears of a prolonged global recession.

 

Intense financial stress in the US and Europe was fuelling concern with economists talking about the worst outlook in a century.

 

“A lot of headless chicken are running around, screaming ‘the sky is falling'. It is an issue of crisis of confidence,” said Song Seng Wun, regional economist at Malaysian brokerage CIMB-GK.

 

“The stock markets are already factoring that [global recession] in… People are talking about a once-in-a-century kind of event,” said Song.

 

“This has to be worse than previous down cycles [given a] synchronised slowdown in global activities, public consumption and investments,” he added.

  

Asian petrochemical stocks were badly hit, with Japan's Asahi Kasei closing down 9.02%, Mitsubishi Chemical tumbling 9.55% and Mitsui Chemicals shedding 13.47%.

 

State-owned refiner PetroChina declined 14.05% and Sinopec closed 12.50% lower in Hong Kong.

 

In South Korea, LG Chemical was down 5.07% at the close, Hanwha Chemicals fell 14.76% and SK Energy fell 12.71%.

 

Indonesia suspended trading at its stock exchange after the Jakarta Composite index shed 168.052 points, or 10.38%, at 1,451.6689.

 

At the close of trading, Japan’s Nikkei 225 had slumped 9.38% at 9,203.32 points, Hong Kong’s Hang Seng index shed 8.17% at 15,431.73 and South Korea’s KOSPI Composite index retreated 5.81% at 1,286.69 points.

 

China’s Shanghai Stock Exchange Composite index fell 3.04% to close at 2,092.22 points and the Taiwan Stock exchange index declined 5.76% to 5,206.40.

 

Singapore’s Straits Times index tumbled 6.61% to close at 2,033.61 points, Malaysia’s Kuala Lumpur Composite index fell 2.71% at 970.19 points and the Philippine Stock Exchange index slumped 4.80% at 2,307.74.

 

The bloodbath in global equities has been continuing as panicking investors headed for the exit in the US and Europe, making massive government-led bailouts of banks necessary, the latest being a £50bn ($88bn) bank rescue plan unveiled by the British government, analysts said.

 

“Panic will spread if [people] continue to see more and more financial institutions are in trouble,” said Song.

 

The International Monetary Fund (IMF) estimated the US financial system would incur $1.4 trillion losses, a 50% jump from its original estimate in April, as the crisis that was threatening global economic stability continued to rage, according to its Global Financial Stability Report (GFSR) released on Tuesday.

 

The multilateral institution, known for being the lender of last resort for economies, called on policy-makers to make “decisive policy measures” to immediately restore market confidence.

 

($1 = €0.73/$1 = £0.57)

 

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By: Pearl Bantillo
+65 6780 4359

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