Asia petrochemical shares mostly lower amid fresh US-China tensions

SINGAPORE (ICIS)–Asian petrochemical shares were mostly lower on Friday as fresh tensions between the US and China continue to weigh on risk appetite as investors eye retaliatory moves by Beijing.

At 03:45 GMT, Sinopec Shanghai Petrochemical was down by 1.08% in Hong Kong, Nan Ya Plastics Corp slipped by 0.16% in Taipei and LG Chem was 2.26% lower in Seoul.

Hong Kong’s Hang Seng Index was down by 1.13%, South Korea’s KOSPI Composite Index was down 0.01% and Singapore’s Straits Times Index fell by 0.89%.

Japan’s financial markets are closed on Friday for a public holiday.

“China’s retaliation measures will be in focus today,” Singapore’s OCBC Bank said in the note.

Company/Stock Exchange	% Change
Hang Seng Index (Hong Kong)	-1.13%
Sinopec Shanghai Petrochemical	-1.08%
PetroChina	3.21%
KOSPI Composite Index (Seoul)	-0.01%
OCI Company	-3.51%
SK Innovation	-0.38%
LG Chem	-2.26%
Lotte Chemical Corp	-1.15%
Hanwha Corp	-0.86%
TSEC weighted index (Taipei)	0.49%
Formosa Petrochemical Corp	0.00%
Nan Ya Plastics Corp	-0.16%
Formosa Chemicals & Fibre Corp	-0.42%
STI Index (Singapore)	-0.89%
Wilmar International	-0.46%
Olam International	1.49%
FTSE Bursa Malaysia KLCI (Kuala Lumpur)	-0.74%
SSE Composite Index (Shanghai)	-1.33%
Jakarta Composite Index	-0.57%
PT. Chandra Asri Petrochemical Tbk	1.72%
SET Index (Thailand)	0.19%
PTT Global Chemical	0.00%
Indorama Ventures	0.93%
IRPC	0.75%
The Siam Cement	0.26%
Thai Oil	2.31%

US stock markets slumped from a four-month high on Thursday after an unexpected rise in US jobless claims – the first since March – raised concerns that the US economic recovery might have stalled due to the rising number of coronavirus infections and a renewed wave of mandated lockdowns.

Earlier, Asian shares ended mixed on Thursday following the ratcheting up of US-China tensions after Washington on 21 July demanded that China close its consulate in Houston by Friday.

The US Secretary of State Mike Pompeo said the decision was made because China was “stealing” intellectual property.

Trump on Wednesday at a press conference said that it “was always possible” that he would order the closure of more Chinese consulates.

China’s Foreign Ministry spokesperson Hua Chunying on Thursday said that “the US should should revoke its erroneous decision”.

“China will surely react with firm countermeasures,” she said.

“This is an unprecedented upgrade of US political oppression against China following imposing restrictions on Chinese diplomats & opening Chinese diplomatic pouches,” Hua said.

The fresh tensions between the two countries follows the tit-for-tat tariff war between them which started in 2018.

In the short term, the risk of the trade war between the US and China reigniting could be a possibility, said John Richardson, ICIS senior consultant.

“Think the die is cast, no way back, I am afraid and we are heading for a new Cold War,” Richardson said. “China hit the US where it hurt last time with PE and other petrochemicals tariffs; could happen again.”

Photo: Traders watch monitors at a bank in Seoul, South Korea. (Ahn Young-joon/AP/Shutterstock)