Asia petrochemical shares up on recovery hopes; oil nears 3-month highs

SINGAPORE (ICIS)–Asian petrochemical shares were higher on Wednesday on hopes of a quick recovery in the world economy as coronavirus containment measures are eased further.

Expectations of extended cut in oil output sent crude prices to their highs in nearly three months, with Brent trading above $40/bbl.

“Sentiment was decidedly positive as the key stock indexes in Hong Kong, South Korea, Japan, Singapore, Malaysia, Thailand, Indonesia and the Philippines surged by more than 1% on Tuesday,” Singapore’s UOB Global Economics & Research said.

At 02:45 GMT, Asahi Kasei Corp was up by more than 2% in Tokyo, Hanwha Corp was around 3% higher in Seoul and Formosa Chemicals & Fibres Corp rose almost 2% in Taipei.

Japan’s Nikkei 225 Index rose by 1.22%, Hong Kong’s Hang Seng Index rose 1.00% and Singapore’s Straits Times Index was up by 2.22%.

Company/Stock Exchange	% Change
Nikkei 225 (Tokyo)	1.22%
Asahi Kasei Corporation	2.30%
JXTG Holdings, Inc.	1.17%
Mitsubishi Chemical Holdings Corporation	4.04%
Mitsui Chemicals, Inc.	5.26%
Hang Seng Index (Hong Kong)	1.00%
Sinopec Shanghai Petrochemical Company Limited	2.59%
PetroChina Company Limited	1.86%
KOSPI Composite Index (Seoul)	2.49%
OCI Company Ltd	3.03%
SK Innovation Co., Ltd.	1.61%
LG Chem, Ltd.	0.76%
Lotte Chemical Corporation	4.21%
Hanwha Corporation	3.43%
TSEC weighted index (Taipei)	1.08%
Formosa Petrochemical Corporation	1.66%
Nan Ya Plastics Corporation	0.78%
Formosa Chemicals & Fibre Corporation	1.09%
STI Index (Singapore)	2.22%
Wilmar International Limited	0.00%
Olam International Limited	1.36%
FTSE Bursa Malaysia KLCI (Kuala Lumpur)	0.54%
SSE Composite Index (Shanghai)	0.37%
Jakarta Composite Index	2.23%
PT. Chandra Asri Petrochemical Tbk	0.68%

South Korea on Wednesday announced a supplementary budget worth won (W) 35.3tr to fight the impact of the coronavirus pandemic, bringing its government’s total stimulus to W270tr, or equivalent to about 14% of the country’s GDP.

Overnight, US chemical stocks were mostly higher despite social unrest and race protests in many states.

Stimulus hopes also ran high in Europe as German Chancellor Merkel is considering a second aid package of €50-100bn in addition to the highly anticipated expansion of the ECB’s emergency bond purchase program by €500bn on Thursday.

Oil prices continued to rise on Wednesday, with Brent breaking above $40/bbl on expectations that OPEC and its allies, including Russia, could extend the current output cuts of almost 10m bbl/day by one to three months.

$/bbl (As of 03:02 GMT)	Last Price	% Change	Net Change	Close	High	Low
August Brent	40.12	1.39%	0.55	39.57	40.42	39.65
July US WTI	37.57	2.06%	0.76	36.81	37.88	36.8

“At $40/bbl, crude oil for August delivery is now the highest since the oil crash on 9 March,” Singapore’s OCBC Bank said in a note.

“We see increased resistance for oil prices to rise above $40/bbl within Q2, given the continued global oil glut,” it said.

Focus article by Nurluqman Suratman

Photo: Man wearing a face mask walks by sale signs at a shopping district in Seoul, South Korea. The trade-dependent economy could shrink for the first time in 22 years. 28 May 2020 (Photo by Ahn Young-joon/AP/Shutterstock)

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