Asia petrochemical shares, crude slump on Spain bailout concerns
23 July 2012 10:53 [Source: ICIS news]
SINGAPORE (ICIS)--Asian petrochemical shares closed sharply lower on Monday as crude futures slumped by more than $3/bbl on concerns that ?xml:namespace>Spain may not be able to prevent a sovereign bailout, which will aggravate the eurozone crisis.
The euro took a beating, falling to multi-year lows against major currencies like the US dollar and the Japanese yen, following news that two regions in Spain – Valencia and Murcia – have sought fiscal rescue from the central government.
At 17:13 Singapore time (09:13 GMT), US crude for September delivery was down by $3.04/bbl at $88.79/bbl, while Brent crude fell by $3.50/bbl to $103.33/bbl.
Among Japan’s petrochemical majors, Asahi Kasei was down 2.15%, Mitsubishi Chemical was down 2.40%and Mitsui Chemicals declined 5.05% as the benchmark index Nikkei 225 closed 161.55 points or 1.86% points lower at 8,508.32.
In South Korea, Hanwha Chemical fell 2.39%, LG Chem slipped 2.32, Kumho Petrochemical declined 3.54% and SK Innovation fell 2.70% as the KOSPI composite index shed 33.49 points or 1.84% to close at 1,789.44.
In Hong Kong, PetroChina fell 2.45% as the Hang Seng index shed 587.33 points or 2.99% at 19,053.47.
In China, the Shanghai Composite Index fell 27.24 points or 1.26% to settle at 2,141.40.
In Thailand, PTT Global Chemical was down 4.12% and Siam Cement fell 1.85% and Integrated Refinery and Petrochemical Complex (IRPC) was down 3.70%, as the SET index was down 23.65 points or 1.96% to close at 1,184.90.
Export ties make Asia vulnerable to the financial and economic troubles in the West.
Over the weekend, the eurozone decided to grant financial assistance of up to €100bn to Spain under the European Financial Stability Fund (EFSF) for the recapitalisation of the country’s banking sector.
Meanwhile, the country faces difficulty on reining in the budget deficit, with two of its regions seeking bailout from the central government.
“Trimming the budget won’t be easy [for Spain],” said DBS Bank Research in a note.
Spain expects its economy to contract by 0.5% in 2013 against a previous expectation of posting a 0.2% growth, it said.
($1 = €0.83)By: Pearl Bantillo +65 6780 4359
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