Asian petchem stocks higher after volatile trading

21 November 2008 10:30  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian petrochemical stocks closed higher on bargain-hunting after a highly volatile session for regional markets on Friday as the spectre of a global recession haunted investors.

Expectations that interest rate cuts from China and the US would help stimulate global economic activity allowed markets to rally Friday afternoon, analysts said.

“At some point, stocks may appear cheap to someone somewhere,” said Song Seng Wun, a regional economist at Malaysian brokerage CIMB-GK.

At the close of trading, Japanese petrochemical industry major Asahi Kasei gained 1.64%, Mitsui Chemicals jumped 4.83% and Mitsubishi Chemical rose 2.23% as the Nikkei 225 was 2.70% higher at 7,910.79.

Japan’s exports in October fell 7.7% year on year, hurt by the strong yen and weak global demand.

South Korea’s petrochemical stocks strongly rebounded from Thursday’s slump, with SK Energy having jumped 9.25%, Hanwha Chemical was 10.68% higher and LG Chem rose 8.51% as the KOSPI composite index jumped 5.80% to 1,003.73.

China’s state-owned oil refiners listed in Hong Kong fell. Sinopec rose 3.29% and PetroChina was up 2.96% as the Hang Seng Index closed 2.93% lower at 12,659.20.

Trading volumes were thin as investors remained reluctant to bet heavily on equities, with companies’ earnings starting to reflect the global economic and financial stress, analysts said.

“There is very few good news that investors can see out there, so [they’re] kind of peeping in the corner into recession alley. There is no light at the end of the alley, so you continue to stand at the corner there and wait,” said CIMB-GK’s Song.

“Over the last three months, we all go into the weekend with trepidation for one reason or another,” he said.

The interest rate cuts and the fiscal stimulus packages “are inevitable,” he said, but will only work to cushion the blow of the economic downturn and not prevent it.

“Given that we really don’t know how severe the downturn will be, we are not sure how effective these measures are in turning things around,” Song said.

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By: Pearl Bantillo
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