Asia petchems stocks fall on recession fears

24 November 2008 10:33  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian petrochemical stocks fell on Monday as investors remained beset with recession fears, while Asia-Pacific Economic Cooperation (APEC) leaders warned against a shift to protectionist trade policies as a quick fix to the current economic problems.

“The outlook for a global recession is certainly weighing on regional markets. Exports are feeling the weight of slowing in global demand – that is likely to continue into next year,” said David Cohen, chief economist at consultancy firm Action Economics.

APEC leaders, who met in Lima, Peru over the weekend, affirmed their commitment to free and open trade, adding that “protectionist measures… would only exacerbate the current economic situation.”

Asia’s export-oriented economies have been feeling the weight of a possible global recession as their major trading partners – the US and Europe – reel from the worst financial crisis in years.

At the close of Monday’s trading, South Korea’s SK Energy was down 4.32%, Hanwha Chemical was lower at 3.95% and LG Chem was down 3.17% as the KOSPI composite index fell 3.35% to 970.14.

China’s state-owned oil refiner Sinopec, which is listed in Hong Kong, was down 1.59% as the Hang Seng Index fell 1.59% to 12,457.94.

Elsewhere in the region, the Shanghai stock exchange composite index closed 3.67% lower at 1,897.1 and Singapore’s Straits Times Index was down 2.52% at 1,620.29.

The Japanese markets were closed for a public holiday.

APEC said that the next 12 months would see its member nations refraining from raising new investment or trade barriers, imposing new exports restrictions or implementing measures in all areas that are inconsistent with the World Trade Organization (WTO), including those that stimulate exports.

The WTO also vowed to push for the conclusion of negotiations to the Doha Development Agenda “to provide to the basis for our economies to grow and prosper.”

“There is enough bad news in the outlook for trade. There is enough reason for the equities sell-off regardless of whether or not they take the protectionist route,” said Action Economics’ Cohen.

Asian stocks largely ignored the US markets’ sharp gains on Friday. The announcement of a government-led bailout of Citigroup, if anything, just added to investors’ worry, analysts said.

Citigroup would be getting a $20bn capital injection from the US Treasury in exchange for preferred shares, with over $300bn of its troubled assets to be guaranteed.

“We are starting to see the extra drag from the financial turmoil that intensified after the mid-September bankruptcy of Lehman Brothers,” said Cohen.

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By: Pearl Bantillo
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