Asia petrochemical shares mostly rise on Ireland bail-out

22 November 2010 11:35  [Source: ICIS news]

SINGAPORE (ICIS)--Shares of petrochemical companies in Asia closed mostly higher on Monday as a result of improved sentiment after Ireland formally sought help to resolve its debt crisis.

At the close of trading, Japanese petrochemical majors Mitsubishi Chemical gained 3.58%, Mitsui Chemicals increased 0.80% and Asahi Kasei inched up 0.60%, as the benchmark Nikkei 225 stock market index rose 0.93% to 10,115.19.

In Hong Kong, China's state-owned refiner PetroChina added 0.62% and Sinopec was 1.37% higher, while the Hang Seng index slipped 0.35% to 23,524.02.

In South Korea, Hanwha Chemical was up 2.80%, Honam Petrochemical slipped 4.06%, SK Energy declined 2.88% and LG Chemical was down 1.62%, as the KOSPI composite index inched up 0.17% to 1,944.34.

Ireland’s decision to request a financial aid package from the International Monetary Fund and the EU provided markets with some relief, as it staved off fears of contagion.

“Wary that markets are eyeing Portugal as the casualty from the EU sovereign debt crisis, eurozone ministers want the package for Ireland to discourage contagion,” DBS Bank said in a research note.

The aid package for Ireland was estimated at around €80bn-90bn ($109.6bn-123.3bn). The bail-out for Greece was €110bn.

China’s recent move to further rein in inflation could slow consumption in Asia’s biggest importer of petrochemicals.

On 19 November, China announced that it would again raise the portion of deposits that banks must keep with the central bank by 50 basis points to 18.50%, effective 29 November, given continued spikes in inflation.

Last month, China’s inflation was at a 25-month high of 4.4%.

Singapore-based DBS Bank said that the hike in the reserve ratio for Chinese banks was expected to permanently siphon off yuan (CNY) 350bn ($52.7bn) from the banking system, based on total deposits of around CNY70,000bn.

“The latest reserve ratio hike does not only address the build-up of excess liquidity in the banking system but is meant to tighten liquidity for banks and slow the pace of new loan issuance,” said DBS.

China’s recent actions suggested it was serious in decisively addressing the country’s inflation problems and risks of economic overheating, the bank said.

($1 = €0.73, $1 = CNY6.64)

Read John Richardson and Malini Hariharan’s Asian Chemical Connections blog
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By: Pearl Bantillo
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