Asia chems stocks fall as markets hit lows

24 October 2008 11:51  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian markets fell to multi-year lows on Friday, dragging down petrochemicals stocks as investors heavily sold down shares amid fears of a global recession, analysts said.

“Investors remained very nervous about a pending global downturn,” said David Cohen, chief economist at UK-based consultancy firm Action Economics.

“It seems like the market was just a little bit overdoing it. There is some panic out there,” he said.

South Korea’s KOSPI led the market rout, shedding 10.57% to 938.75 - the first time the benchmark index fell below the 1,000 mark in three years, as the country recorded its slowest GDP growth in four years at 0.6% in the third quarter.

The KOSPI has lost more than 20% this week, its biggest decline on record.

Petrochemical stocks SK Energy slumped 14.92% and Hanwha Chemical lost 14.89%.

Japan’s Nikkei 225 tumbled 9.60% to 7,649.08, its lowest level in five and a half years, taking down petrochemical stocks with it.

Mitsubishi Chemicals slumped 8.19%, Asahi Kasei fell 8.83% and Mitsui Chemicals down 7.42%.

Hong Kong’s Hang Seng index declined 8.30% to 12,618.38., with state-owned oil refiner PetroChina falling 11.03% and Sinopec down 10.71%.

Global efforts aimed at restoring market stability were doing little to calm investors, with volatile trading conditions likely to persist in the short term, analysts said.

“It seems like this downtrend in equities is likely to continue for a little bit until we see how severe the downturn in the world (economy would be),” said Cohen.

Regional sectors such as petrochemicals, which have been largely export-oriented, have been showing signs of strains from the financial crisis that originated in the West.

“The region will certainly feel the spillover effects of the global downturn,” Cohen said.

China’s economic growth, while expected to remain superior to the rest of the world, would slow to single-digit levels this year, economists said.

Trading in its petrochemical markets had been sluggish due to slumping demand despite prices nosediving, market sources said.

Action Economics expects Asia ex-Japan’s GDP growth to slow to 7.5% this year from about 9.5% last year. In 2009, the slowdown would be more acute, with the region’s growth likely decelerating to 6.5%, Cohen said.

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By: Pearl Bantillo
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