Asia petchem stocks fall on gloomy economic data

30 January 2009 11:55  [Source: ICIS news]

By Pearl Bantillo

SINGAPORE (ICIS news)--Asian petrochemical stocks fell along with regional markets on Friday as gloomy economic data and poor corporate results affected investors’ fragile appetite, sources said.

“The Asian markets came under pressure due to macroeconomic data releases in the US and Japan, highlighting that the depth of the recession is more severe than anticipated,” said Dariusz Kowalczyk, Hong Kong-based chief investment strategist at brokerage SJS Markets.

Japan’s manufacturing activities fell a record 9.6% last month from November, as exports slowed amid the global economic downturn, based on data from the Ministry of Economy, Trade and Industry (METI).

Production outlook for the succeeding two months also remained bleak according to the METI’s survey, while the country’s unemployment rate rose to 4.4%.

At the close of trading on Friday, Japan’s petrochemical majors were flagging, with Asahi Kasei down 2.34%, Mitsui Chemicals slumping 6.07% and Mitsubishi Chemical 2.35% lower.

Japan’s stock market benchmark Nikkei 225 index fell 3.12% to 7,994.05.

China’s state oil refiner Sinopec was down 1.85% in Hong Kong.

South Korea’s LG Chemical was down 0.25% and Hanwha Chemical 0.41% as the KOSPI composite index slipped 0.38% at 1,162.11.

Elsewhere in the region, Singapore reported a 2.6% jobless rate in the fourth quarter, which it largely attributed to retrenchment at export-oriented companies against the backdrop of substantial weakening in global demand.

The corporate earnings reporting season was expected to add to the gloom given the poor state of global demand.

“The earnings released by various companies were very disappointing,” said Kowalczyk.

Regional markets initially took their cue from Wall Street overnight as a record high increase in US unemployment claims weighed on sentiment. The Dow Jones Industrial Average tumbled 2.70% to 8,149.01.

“The market will continue to be pretty volatile because it is torn between two factors – the negative macroeconomic and earnings news and hopes about [the fiscal and monetary] policies [instituted so far],” Kowalczyk said.

The markets welcomed the approval of the US$819bn fiscal stimulus package by the House of Representatives on Thursday but it remained to be seen if it would help boost the flagging US economy.

“These hopes were preventing the markets from falling further,” Kowalczyk said.

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By: Pearl Bantillo
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