Asian petchem stocks gain as global recovery stays on course

07 April 2010 09:53  [Source: ICIS news]

By Pearl Bantillo

SINGAPORE (ICIS news)--Asian petrochemical stocks gained on Wednesday due to upbeat regional economic outlook amid continued monetary and fiscal support from various governments.

In a report released on Wednesday, the World Bank raised its growth forecast for developing east Asia to 8.7% for 2010, nearly a full percentage point higher than its November projection, bullish that the region would lead the global recovery from last year’s recession.

GDP growth in the region slowed to 7.0% in 2009 from 8.5% in the previous year, based on World Bank’s data.

Better economic prospects bode well for consumption of petrochemical raw materials.

Shares of major petrochemical companies in Japan closed higher, with Mitsui Chemicals up 1.02% and Asahi Kasei rising 0.39%, while the benchmark Nikkei 225 index inched up 10.51 points to 11,292.83.

In South Korea, Honam Petrochemicals jumped 3.04% at the close of trading, while Hanwha Chem soared 5.58%. SK Energy gained 3.77% and LG Chem rose 2.80%, even as the KOSPI Composite index barely moved at close of trade at 1,726.60.

In Hong Kong, Chinese petrochemical giant PetroChina was up 1.73%, as the benchmark Hang Seng index jumped 1.82% at 21,928.77.

“Recovery in demand abroad, a sustained fiscal and monetary stimulus within developing East Asia, and a rapid rebound in consumer spending prompted the Bank to raise its projection,” the World Bank said in a statement.

The multilateral institution said that the region had “emerged from the crisis with manageable deficits and relatively low public and external debt”.

World Bank chief economist for East Asia Pacific region Vikram Nehru, however, said that the world faces a more difficult trade environment, given prospects of slower growth in developed countries.

“In that setting, the developing countries of East Asia will need to carefully manage the withdrawal of fiscal stimulus measures in the short term while returning to their structural reform agendas to promote growth in the long term,” Nehru said in a statement.

Economic expansion in China, the biggest among Asia’s developing economies, was expected to accelerate to 9.5% this year from 8.7% in 2009, based on World Bank’s projections.

Governments across the world were careful about withdrawing the fiscal and monetary policy on fears of disrupting the recovery process from the 2009 recession.

The Bank of Japan (BOJ) had just maintained its 0.1% policy rate on Wednesday, while it put itself to task to overcome deflation – a prolonged condition of falling consumer prices – prevailing in the country.

“Japan’s economy has been picking up mainly due to improvement in overseas economic conditions and to various policy measures, although there is not yet sufficient momentum to support a self-sustaining recovery in domestic private demand,” the BOJ said in a statement.

Over the past few days, the US had also churned out positive economic data, boosting market sentiment.

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By: Pearl Bantillo
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