22 September 2011 09:18 [Source: ICIS news]
SINGAPORE (ICIS)--The shares of petrochemical companies in Asia fell sharply on Thursday, tracking the slump seen in regional bourses, on concerns that the latest measures announced by the US Federal Reserve may not be able to boost the ailing economy.
The Fed on Wednesday announced that it will buy $400bn (€292bn) of longer-term treasuries and mortgage-backed securities in an attempt to prevent the economy from slipping into a recession, but stopped short of announcing more aggressive measures.
The central bank’s statement that there are "significant downside risks to the economic outlook" spooked investors and prompted a sell-off on Wall Street, with the Dow Jones industrial average falling by 2.5% to close at 11,124.84.
“While the market had largely expected the news, the Fed's grim read on the economy was discouraging, and investors remained sceptical about the long-term effectiveness of the action to spur borrowing, hiring and spending,” Australia-based Morgan Stanley Smith Barney said in a research note on Thursday.
By 15:00 hours Singapore time (07:00 GMT), Japanese producer Mitsui Chemicals was down by 2.26% and Mitsubishi Chemical was 3.57% lower. The benchmark Nikkei 225 index ended 2.07% lower at 8,560.26.
In South Korea, LG Chem was 4.55% lower, SK Innovation was down 7.06% and Honam Petrochemical was 5.31% lower. The Korea Composite Stock Price Index ended down 2.9% at 1,800.55 points.
In Malaysia, PETRONAS Chemicals Group was down by 4.30%, with the FTSE Bursa Malaysia down by 1.35% at 1,399.89.
Thailand’s petrochemical major PTT Chemical was down by 3.78%, while Siam Cement Group fell by 1.96%. The Thai SET index fell by 2.22% to 1,006.73.
In Hong Kong, PetroChina was down 3.60% and Sinopec Corp fell by 4.89%. The benchmark Hang Seng index fell by 4.38% to 17,999.42.
Meanwhile, crude futures were also trading sharply lower in the afternoon session amid growing concerns that the worsening economic conditions in the US might slash oil demand.
At 07:20 GMT, November Brent crude on London’s ICE futures exchange was trading at $108.58/bbl, down by $1.78/bbl from the previous close. Earlier, the North Sea benchmark fell to a session low of $108.30/bbl, down by $2.06/bbl.
November NYMEX light sweet crude futures were at $84.15/bbl, down by $1.77/bbl from the previous close. Earlier, the contract price fell to an intra-day low of $83.88/bbl, down by $2.04/bbl.
Asia’s vulnerability to the financial and economic troubles of the West lies in exports, its main engine of growth.
($1 = €0.73)
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