UpdateHang Seng hits 3-yr low, petchems tumble

23 October 2008 09:10  [Source: ICIS news]

SINGAPORE (ICIS news)--Asia’s major petrochemical stocks tumbled, as regional indexes fell to multi-year lows on Thursday, on fears of a prolonged global economic slump.

 

At 15:20 Singapore time (07:20 GMT), China’s state-owned oil refiner Sinopec had fallen 5.48% and PetroChina was down 6.76% in Hong Kong as the Hang Seng index declined 3.97% at 13,700.13 points but earlier in the session hit its lowest level since April 2005.

 

At the close of trade in South Korea, Hanwha Chemical slumped 8.53%, LG Chem declined 10.12% and SK Energy shed 14.37% as the KOSPI Composite index fell 7.48% at 1,049.71 points.

 

The MSCI index of Asia-Pacific shares outside of Japan also dropped 5.5% to its lowest since October 2004.

 

In Japan, Asahi Kasei slipped 1.40% and Mitsui Chemicals retreated 3.84%. The Nikkei 225 closed down 2.46% at 8,460.98 points, after plunging 7% in early trade.

 

“All that has been done just made a difference between a global depression scenario and a recession,” said Song Seng Wun, regional economist at Malaysian brokerage CIMB-GK Research.

 

“We just moved away from an ‘end of the world’ scenario but people are now working out the impact of a recession on earnings and consumption. Things are not looking pretty,” Song said.

 

“We will probably see more discouraging signs, especially with the US projecting a bad quarter. Even China has showed signs of slowing,” said David Cohen, chief economist at consultancy firm Action Economics.

 

China’s economic expansion looked set to decelerate to single-digit levels this year after five years of double-digit growth, economists said.

 

Its petrochemical industry had seen product prices tumbling in recent weeks as demand continued to weaken.  

 

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

 

The sharp fall in 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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