Asia markets rebound on US plan to fix crisis

19 September 2008 06:51  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian petrochemical stocks rebounded on Friday as investors cheered the US government’s plan to step in more decisively to contain the financial crisis and stabilise the markets.

The Dow industrials recovered on Thursday, rising 3.86%, following reports the Bush administration will come up with a comprehensive solution to rescue banks from bad debts that piled up from the sub prime loan crisis last year.

Stock market indices in the region tracked the US markets but volatility could persist until investors were convinced the proposed solution to the crisis would work, analysts said.

"This is a key short-term issue – whether investors will begin to feel that this is a solution to this financial market issue in the US," said Malcolm Wood, Asian equity strategist at Morgan Stanley.

"If that is for real, then we can get a bit more of a rally here until the markets figure out exactly the ramifications [of the proposed solution]," Wood said.

The spate of bad news cramped so early in the week - with US financial big names Lehman Brothers, Merrill Lynch and American International Group crumbling under the weight of massive sub prime losses – cast a gloom over global markets.

 "From the Asian perspective, if we can see signs of US stabilising, we can snap back [up]," Wood said.

Economists said the US financial crisis might push the world’s biggest economy into recession and drag the rest of the world with it. Asia will feel to brunt given that it counts the US among its major export markets.

"The fundamentals in Asia are obviously slowing but still positive," Wood said.

At 12:20pm local time (04:20 GMT), South Korea’s SK Energy jumped 7.95%, LG Chemical rose 1.08% and Hanwha Chemicals gained 4.83%. The Kospi 100 index was up 5.21% at 1,395.44.

In Hong Kong, oil refiners Sinopec and PetroChina advanced 5.79% and 4.43%, respectively. The Hang Seng Index was 6.38% higher at 18,770.32.

In Japan, Mitsubishi Chemicals edged up 7.59%, Mitsui Chemicals up 2.87% and Asahi Kasei 1.58% higher. The Nikkei 225 index advanced 3.33% at 11,871.81. In Taiwan, Formosa Chemical rose 6.84%.

To discuss issues facing the chemical industry go to ICIS connect

ICIS Copyright © Reed Business Information 2009

Author: Pearl Bantillo
+65 6780 4359

< previous article(ICIS Podcast: Chemical News Central 2 November 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.