Asian petchems stocks fall on recession concerns

08 January 2009 05:11  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian petrochemical stocks tracked regional markets’ losses on Thursday with poor economic data assailing investors’ at every turn, halting the equities uptrend at the start of the week.

The US markets fall on a dismal jobs data and corporate earnings concerns on Wednesday triggered a sell-down in Asian stocks.

Export-oriented companies, like those in the petrochemical industry, may not be the strongest bet for investors coming back into equities market given the weak state of global demand, with most economies struggling to post growth, analysts said.

“Not a lot of foreign investors are coming in on dips. They are still cautious so they are loading (stocks) in instalment and they are still playing defensive for now,” said Daniel Soh, Singapore-based economist at consultancy firm Forecast.

Investors maybe picking up companies with more exposure on domestic economies as the host of fiscal stimulus packages introduced from the fourth quarter will benefit them most compared to export-oriented ones, said Soh.

At 12.37pm Singapore time (5:39am GMT), Japanese petrochemical majors slumped, with Mitsui Chemicals declining 6.12%, Mitsubishi Chemical falling 6.80% and Asahi Kasei down 4.63%.

Japan’s Nikkei 225 shed 3.39% at 8,925.74.

China’s state-owned refiners Sinopec and PetroChina fell 5.38% and soared 4.56%, respectively, in Hong Kong as the benchmark Hang Seng index declined 3.59% at 14,450.05.

South Korea’s petrochemical majors also advanced, with SK Energy slumping 4.28% and LG Chemical down 4.57% as the KOSPI composite index fell 2.47% at 1,197.89.

Some economies in the region, including Asia’s largest – Japan, have already fallen into recession.

South Korea’s economic prospects continued to deteriorate, with analysts projecting as much as a 3% GDP contraction this year, which would be the country’s first in 11 years, analysts said.

Taiwan reported on Wednesday a 42% on-year decline in December exports, prompting its central bank to take emergency steps by slashing interest rates by 50 basis points.

Malaysia also saw declines in its November exports.

“There will be more such bad news coming but there will be buyers on every dip. Asian markets are not going to go up but they are going to be fairly supported and will be caught in a range in the first quarter,” said Soh.

Global economic recovery is expected to kick in during the second half of 2009 at the earliest so, equities markets may see the trough by the end of this quarter, he added.

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By: Pearl Bantillo
+65 6780 4359

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