Asia petchem rally reverses on recession jitters

15 October 2008 10:58  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian petrochemical stocks failed to sustain a rally for a third straight day on Wednesday as fears about a global recession continued to weigh on sentiment, analysts said.

 

“If we are talking about bringing confidence back in the financial market, more still has to be done. There is some improvement [in sentiment] but things will take a while to clear up,” said Vishnu Varathan, regional economist at consultancy firm Forecast.

 

At the close of trading, Japanese petrochemical majors succumbed to profit-taking following double-digit gains the previous day. Asahi Kasei retreated 4.88%, Mitsubishi Chemical was down 2.98% and Mitsui Chemicals 1.03% lower.

 

The Nikkei 225, meanwhile, closed 1.06% higher at 9,547.47 points after its historic single-day gain of more than 14% on Tuesday.

 

China’s state-owned oil refiners Sinopec and PetroChina fell 6.83% and 6.52%, respectively, in Hong Kong, while the Hang Seng index fell 4.96% to 15,998.30 points.

 

South Korea’s Hanwha slipped 0.56%, LG Chemical fell 0.95% as the KOSPI Composite index closed 2.0% lower at 1,340.28 points.

 

The moves of Asian governments to ease the credit crunch in the region had failed to lift the industry’s dour mood as petrochemical product prices continued to plummet to multi-year lows, tracking the decline in crude values, market sources said.

 

Japan’s unlimited US-dollar facility window for financial institutions and Hong Kong’s plans to guarantee deposits to encourage banks to lend again followed similar moves in the US and Europe to restore confidence in the banking system.

 

The financial measures taken internationally would mitigate the impact of the financial crisis on the global economy but the start of the recovery might not take place until late next year, Forecast’s Varathan said.

 

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By: Pearl Bantillo
+65 6780 4359

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