Interest rate cuts spur Asian petchems rally

30 October 2008 06:56  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian petrochemical stocks rallied on Thursday along with regional bourses as investors cheered the central banks’ efforts to pump in more liquidity into the global financial system to avert a deep recession.

 

There were expectations that the Bank of Japan would cut interest rates at its meeting tomorrow to rev up its flagging economy, which was being rammed by falling exports and aggravated by a strong yen.

 

“We are expecting there will be a quarter-point reduction in interest rates,” said Ray Attrill, an Australian-based economist at consultancy firm Forecast.

 

“Cutting interest rates, although it is a very marginal change given how low interest rates are, could support efforts to try and weaken the yen against the US dollar if the Bank of Japan is going to start intervening,” he added.

 

The People’s Bank of China (PBoC) and the US Federal Reserve slashed interest rates on Wednesday to boost consumer spending in their respective economies. The Fed cut its policy rates by half a point to 1.0%, while PBoC trimmed the cost of one-year loans by 27 basis points to 6.66%.

 

At 13.40 hours Singapore time (06:30 GMT), state-owned petrochemical major Sinopec soared 16.87% despite announcing a 39% decline in third quarter profits.

 

PetroChina also jumped 14.02% as the Hang Seng Index gained 10.11%.

 

In South Korea, SK Energy rallied 14.91%, Hanwha Chemical jumped 14.99% and LG Chemical rose 11.82% as the benchmark KOSPI composite index surged 11.99% to 1,085.17 points.

 

In Japan, Mitsubishi Chemicals was up 11.67%, Asahi Kasei advanced 10.75% and Mitsui Chemicals added 9.79% while the Nikkei 225 gained 9.28% to 8,974.19.

 

To discuss issues facing the chemical industry go to ICIS connect

 

 

By: Pearl Bantillo
+65 6780 4359

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly