UpdateAsia petchems continue to suffer big losses

10 October 2008 12:59  [Source: ICIS news]

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SINGAPORE (ICIS news)--Asian petrochemical stocks were hit by heavy losses again on Friday as the global financial crisis started claiming casualties in the region with Singapore falling into recession and Japan’s fifth largest insurer going bankrupt.

 

Prices of petrochemical products had been falling to multi-year lows due to continued softening in demand and some companies had to run plants at dramatically reduced rates, analysts said.

 

At the close of trading, Japan’s Asahi Kasei slumped 7.14%, Mitsubishi Chemical retreated 4.19% lower and Mitsui Chemicals was off 2.03% as the Nikkei 225 index plummeted 9.26% to 8,276.43 points.

 

Meanwhile, the country's fifth largest insurer, Yamato Life Insurance Co, filed for bankruptcy, citing heavy investment losses.

 

South Korea’s KOSPI Composite index fell 53.42 points to close 4.13% lower at 1,241.47.

 

Chinese state-owned oil refiner PetroChina fell 5.81%, while state-run petrochemicals giant Sinopec plunged 8.56% in Hong Kong. The Hang Seng index closed 7.19% lower at 14,796.87 points.

 

Major regional plantation stocks tumbled at the close. Wilmar International fell 8.7%, IndoAgri slumped 15.3% and Golden Agri Resources fell 13.0% as Singapore’s Straits Times index retreated 7.34%.

 

The island state had fallen into its first technical recession since 2002, after recording its second consecutive quarter of negative growth in Q3.  

 

Panicking investors in the region and worldwide continued to flee equities, not convinced the coordinated rate cuts of global central banks on Wednesday and Thursday would avert a major global economic downturn, analysts said.

 

“It [rate cuts] does not change the big picture of [a] frozen credit market. There is a complete breakdown of confidence in the banking system,” CFC Seymour Securities chief investment strategist Dariusz Kowalczyk said.

 

Anxious investors were hoping G7 finance leaders would come up with stronger measures to stop the market panic following their meeting later on Friday, analysts said.

 

Bohan Loh and Judith Wang contributed to the story

 

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