Japanese petchem stocks tumble amid European economic fears

21 May 2010 11:19  [Source: ICIS news]

SINGAPORE (ICIS news)--Japanese petrochemical stocks tumbled on Friday, in line with regional bourses, following recent losses on Wall Street, where stocks dived amid uncertainty over economic conditions in Europe.

“We are seeing a sell-off phase now in the US where investors are being spooked by news from Europe,” said Song Seng Wun, regional research head at Malaysian brokerage CIMB-GK.

The Dow Jones Industrial Average index on Thursday fell by 376 points to 10,068.

The sell-off seen in global stock markets was due to fears that the eurozone’s debt crisis could soon spread globally, Song said.

“What we see elsewhere is just risk aversion. People are flocking to gold and the US dollar as a hedge,” he added.

At 15:00 hours Singapore time (08:00 GMT), Japanese petrochemical majors were down, with Mitsui Chemicals slipping 2.99%.

Mitsubishi Chemical was 1.57% lower and Asahi Kasei down 2.22% as the benchmark Nikkei 225 index fell 2.45% to 9,784.54.

Elsewhere in the region, the Singapore bourse closed 0.8% lower, India slid 1.3% and Indonesia’s benchmark stock index slumped 4%.

The Hong Kong and South Korean stock exchanges were closed for a public holiday while trading in Thailand has been suspended due to political turmoil.

“There is not much positive news now. Investors will hold off until confidence returns and that is pretty much dependent on newsflow now,” said Song of CIMB-GK.

Debt issues in the eurozone in countries such as Greece and Portugal have raised fears that the problem could spill over to other countries in Europe, which could possibly hamper economic recovery in the US, said David Cohen, a Singapore-based economist with Action Economics.

In a recent note, Singapore’s DBS bank slashed its economic growth forecast in 2010 for Europe to 0.6% from 1.1%.

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