01 October 2013 10:31 [Source: ICIS news]
By Nurluqman Suratman
SINGAPORE (ICIS)--Shares of major Asian petrochemical firms were mixed at the close of trade on Tuesday, as the partial US government shutdown caused by a budget deadlock weighed down on positive market sentiment generated by a fresh string of upbeat economic development in the region.
At the close of trade, Japanese producer Mitsui Chemicals was 0.37% higher, while JX Holdings fell 0.98%, with the benchmark Nikkei 225 index up by 0.20% at 14,484.72.
In South Korea, LG Chem was 1.30% lower, while SK Inovation fell 0.34%, while the KOSPI Index closed 0.10% higher at 1,998.87.
The US government has begun a partial shutdown on Tuesday after its Congress failed to agree on funding for the new fiscal year starting 1 October.
“A more pressing concern … is the increasing odds of an adversely deep reaction in financial markets in view of the continuing politically-motivated delays from Congress,” OSK DMG chief economist Thomas Lam said in a note to clients.
In the last shutdown of the US government in mid-1990s, the deadlock lasted more than 20 days, depressing growth in the world’s biggest economy by about 0.25-0.50% in the fourth quarter of that year, Lam said.
A week of US government shutdown is estimated to cost the world’s biggest economy $10bn (€7.4bn), according to a blog posted on the website of the White House.
Within Asia, however, latest economic data showed signs of improvement, boosting market sentiment.
China’s official purchasing managers’ index (PMI) released on Tuesday indicated signs that manufacturing activity in the world’s second biggest economy is picking up.
Its September PMI crept up to a 17-month high of 51.1% in September, but just a tad higher than 51.0% recorded in August, according to China’s National Bureau of Statistics (NBS).
Investment bank HSBC, on the other hand, has a lower final PMI reading for China in September at 50.2, but also an improvement from the previous month’s 50.1 reading.
HSBC’s PMI reading for South Korea, on the other hand, also improved to 49.7 in September from 47.5 in August, but still indicating contraction.
Market players also appear to be welcoming Japan’s measure to prevent a fiscal crisis via hiking sales tax.
Japan Prime Minister Shinzo Abe was quoted in media reports on Tuesday as announcing that plans to raise the national sales tax to 8% from 5% in April next year will proceed, to ease its public debt that has ballooned to more than twice the size of the third biggest economy in the world.
($1 = €0.74)
Additional reporting by Pearl BantilloRead John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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