Asian petchem stocks fall on earnings concerns

23 October 2008 04:03  [Source: ICIS news]

SINGAPORE (ICIS news)--Asia’s petrochemical share prices declined in early trade on Thursday, extending the previous day’s losses as the anticipated global economic slump painted a bleak corporate earnings picture, analysts said.

 

Regional bourses in Asia tracked overnight losses in the US market where investors, spooked by weak company results, sent the Dow Jones industrials tumbling 514.45 points or 5.69% to close at 8,519.21.

 

“The results from America was discouraging and the problems with the credit market turmoil are going to aggravate (the impact on earnings),” said David Cohen, chief economist at consultancy firm Action Economics.

 

At 10.16 hours Singapore time (0316 GMT), China’s state-owned oil refiners Sinopec and PetroChina were off 5.48% and down 6.08% respectively as the Hang Seng Index was down 4.39% at 13,639.92.

 

South Korea’s Hanwha Chemical fell 5.24%, LG Chem declined 11.51% and SK Energy slid down 12.34% as the KOSPI Composite Index shed 8.24% at 1,041.48.

 

In Japan, Mitsubishi Chemicals eased 4.23%, Asahi Kasei slipped 6.74% and Mitsui Chemicals down 6.59% while the Nikkei 225 fell 5.60% at 8,188.61.

 

“We will probably see more discouraging signs, especially with the US projecting a bad quarter. Even China has showed signs of slowing,” said Cohen.

 

China’s petrochemical industry saw product prices tumbling in recent weeks as demand continued to weaken as a result of slowing exports and credit woes. The country’s economic expansion looked set to decelerate to single-digit levels this year after five years of double-digit growth, analysts said.

 

South Korea was also battling to keep its economy from plunging into recession, economists said.

 

The sharp fall of the Korean won since the start of the year could adversely affect cracker production as feedstock naphtha, which was priced in US dollars, would be more expensive, market sources said.

 

Leon Toh contributed to this article.

 

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By: Pearl Bantillo
+65 6780 4359

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