Asia petrochemical shares tumble on heightened demand concerns

04 June 2012 04:21  [Source: ICIS news]

SINGAPORE (ICIS)--Shares of petrochemical companies in Asia tumbled on Monday morning, tracking falls in regional bourses, on heightened concerns over weakening global demand amid the eurozone debt crisis, continued fragility of the US economy, and China’s slowdown.

Poor US jobs data released late on 1 June triggered a sell-off in Wall Street, with the Dow Jones industrial average falling 274.88 points or 2.22% to settle at 12,118.57.

At 10:57 Singapore time (03:57 GMT), Japan’s petrochemical companies took a beating on Monday, with Mitsui Chemicals shedding 5.23%, Mitsubishi Chemical down 3.57% and Asahi Kasei trading 1.72% lower, with the Nikkei 225 index down by 169.18 points or 2.00% at 8,271.07.

In South Korea, Hanwha Chemical fell 3.69%, LG Chem slumped 4.56% and Kumho Petrochemical shed 7.11%, with the KOSPI composite index lost 45.21 points or 2.46% at 1,789.28.

In Hong Kong, the Hang Seng index was 450.36 points or 2.43% lower at 18,107.98.

The Shanghai Composite Index was down 27.28 points or 1.15% 2,346.15.

“It is not good that both the US and eurozone are facing fiscal and recession challenges. Throw in a slowing China, it is hard for risk aversion to overcome the hope of monetary stimulus at this stage. Of course, eurozone still needs to provide a game plan on how to save the euro,” DBS Bank Research said in a note to clients.

The Dow Jones industrial average was at its lowest level since December 2011, according to DBS Bank Research, citing that the “larger worry is the negative spillover from the eurozone sovereign debt crisis on the US economy”.

Markets will be eagerly awaiting the testimony of US Federal Reserve chairman Ben Bernanke before the US Joint Economic Committee on 7 June on indication for a possible third quantitative easing policy, in which the central bank injects the financial system with liquidity to boost the ailing US economy.

By: Pearl Bantillo
+65 6780 4359

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