13 November 2008 07:23 [Source: ICIS news]
SINGAPORE (ICIS news)--Asian petrochemical stocks slumped on Thursday as regional markets tracked overnight losses at Wall Street on concerns that the US will take longer to solve its financial woes.
The Dow Jones Industrial Average shed 4.73% on Wednesday to 8,282.66 points as US Treasury Secretary Henry Paulson announced a preference for a direct capital injection into banks rather than buying their bad assets as originally planned.
"We believe right now that the bear market rally is done," said Sutthichai Kumworachai, Thailand-based analyst at KGI Securities, citing concerns that US and Europe would fall into recession continued to hound investors.
At 13:30 Singapore time (05:30 GMT), among the Japanese petrochemical stocks Asahi Kasei was down 3.78%, Mitsui Chemicals retreated 6.32% and Mitsubishi Chemical slumped 9.59% lower as the Nikkei 225 tumbled 5.64% to 8,205.24.
The Hang Seng Index was down 6.63% at 13,015.28.
The US Treasury had earlier proposed to purchase banks’ bad assets when it was lobbying for the approval of a $700bn financial bailout package but has now changed its track.
"In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks," said Paulson.
Market players were keenly following financial and economic developments in the US to gauge how deeply Asia would be hurt if the world’s biggest economy were to suffer a major economic downturn, analysts said.
"People right now are concerned that the $700bn (bailout package) would not be enough," said Kumworachai. "The market expects to see more of the plan in the future."
"We believe that the downtrend is still not over in the short term," said Kumworachai.
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