Asia petchems stocks mixed, volatility to persist

17 October 2008 05:45  [Source: ICIS news]

By Pearl Bantillo

 

SINGAPORE (ICIS news)--Asian petrochemical stocks were mixed on Friday, with volatility expected to persist as investors brace for a significant slowing in the world economy even as governments in the region worked to ensure financial stability through deposit guarantees.

 

Malaysia was the latest in Asia to announce deposit covers after Singapore and Hong Kong mirrored the moves of their Western counterparts in a bid to restore confidence in the banking system.

 

At 12:10 hours Singapore time (0410GMT), Japan’s Asahi Kasei gained 8.87%, Mitsubishi Chemical 8.77% higher and Mitsui Chemicals gaining 4.15% as the Nikkei 225 rose 1.78% at 8,608.66.

 

China’s state-owned oil refiners Sinopec jumped 6.50% while PetroChina slipped 0.95% in Hong Kong, while the Hang Seng Index was 0.21% lower at 15,198.44.

 

South Korea’s Hanwha Chemical slumped 14.37%, LG Chemical fell 0.13% and SK Energy fell 1.64% as the KOSPI Composite Index slipped 1.57% at 1,194.73.

 

The Dow Jones industrial’s 400-point rally overnight failed to entice investors to pick up the petrochemical stocks.

 

The fundamentals for the petrochemical industry have deteriorated as demand continued to fall in line with the general economic weakness, exerting strong prices pressures on products such as toluene and benzene, analysts said.

 

With increased capacity expected in the Middle East and China next year, “there is now demand side risk given everything that has happened,” said Andrew Wong, Singapore-based analyst at Standard & Poor’s.

 

“If capacity growth outpaces demand growth in the next two to three years, certainly the potential for a severe downturn is there,” Wong said.

 

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By: Pearl Bantillo
+65 6780 4359

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