Shares of China petchem majors slump amid Greece worries

Nurluqman Suratman

07-Jul-2015

By Nurluqman Suratman and Viola Pan

Shares of China petchem majors slump amid Greece worriesSINGAPORE (ICIS)–Shares of China state-owned petrochemical majors slumped on Tuesday as investors largely ignored Beijing’s efforts to stabilise its equities markets, with focus mostly on developments in debt-saddled Greece, whose people voted against a bailout deal with creditors over the weekend.

In the Hong Kong bourse, refining and petrochemicals major Sinopec shed 14.78%, CNOOC declined by 1.86% and PetroChina was down 2.12%.

In the Shanghai bourse, Sinopec shares were down 9.94%, in line with sharp declines across China’s stock indices in spite of the government’s intervention to stem the rout in its equities markets.

The Shanghai Composite Index has nosedived 27% from its peak this year of 5,178.19 points on 12 June.

On 4 July, 21 major securities brokers pledged to spend no less than yuan (CNY) 120bn ($19bn) on exchange traded funds (ETF) that track the performance of blue chip stocks.

The Chinese government measures that include a halt in initial public offerings (IPOs), as well as a call on top brokerages in the country to buy massive amount of shares and pledged to raise money through multiple channels, provided a lift to Chinese bourses on Monday but the gains were short-lived.

On Tuesday, the Shanghai stock index slipped 1.29% to close at 3,727.13; the  Shenzhen Component Index lost 5.8% to close at 11,375.6; while the benchmark Hang Seng Index in Hong Kong fell 1.03% to 24,975.31.

Concerns over the fate of Greece continued to hound the global markets.

Greek finance minister Yanis Varoufakis unexpectedly resigned on Monday, ahead of the emergency eurozone finance ministers meeting on 7 July. Eurozone leaders will also hold  an emergency meeting on 8 July to discuss Greece.

“All eyes are on the Eurogroup’s leaders emergency meeting today [Tuesday]. Ahead of this summit, officials took a tough stance on the referendum results; stressing that there is unlikely to be debt relief and softening their demands for belt-tightening measures by Athens,” said Singapore-based DBS Group Research.

“A compromise still seems difficult without any element of debt relief, but as dust settles after the referendum, there is still need for Athens to table a new bailout bid later today,” it said.

Shares of other publicly listed companies in other countries in the region also tumbled on Tuesday.

In Taiwan, Formosa Petrochemical Corp was down 1.90%, while Formosa Chemicals & Fibre Group slipped 0.68% in afternoon trade, with the Taiwan Stock Exchange Weighted Index down 0.06% at 9,250.16.

In South Korea, LG Chem fell by 4.78%, while Lotte Chemical Corp was 3.04% lower, with the KOSPI index down 0.66% at 2,040.29.

Malaysia’s PETRONAS Chemicals Group (PCG) was trading 0.78% lower, while Thailand producer PTT Global Chemical (PTTGC) fell by 0.78%.

($1 = CNY6.21)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

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