Asia petrochemical shares tumble on concerns over Omicron variant

SINGAPORE (ICIS)–Shares of petrochemical companies in Asia tumbled on Monday, while crude recouped some of the heavy losses in the previous session, on concerns over the emergence of a new and more transmissible COVID-19 variant called Omicron.

Developments on the new coronavirus variant, which could disrupt global economic recovery, will be closely watched this week.

At 10:40 Singapore time (02:40 GMT), Asahi Kasei was down 2.17% in Tokyo, SK Innovation fell by more than 3% in Seoul and Formosa Petrochemical Corp slipped by 0.52% in Taipei.

Japan’s benchmark Nikkei 225 Index was stable, Hong Kong’s Hang Seng Index was 0.44% lower and Singapore’s Straits Times Index index fell by 0.81%.

Company/Stock Exchange (as of 02:40 GMT)	% Change
Nikkei 225 (Japan)	0.00%
Asahi Kasei Corp	-2.17%
ENEOS Holdings, Inc	-1.35%
Mitsubishi Chemical Holdings Corp	-1.21%
Mitsui Chemicals, Inc	-1.11%
Hang Seng Index (Hong Kong)	-0.44%
China Petroleum & Chemical Corporation (Sinopec)	-0.56%
PetroChina Company Limited	0.59%
KOSPI Composite Index (South Korea)	-0.40%
OCI Company Ltd	2.71%
SK Innovation Co., Ltd	-3.11%
LG Chem, Ltd	-0.83%
Lotte Chemical Corp	-0.50%
Hanwha Corp	-1.12%
TSEC weighted index (Taiwan)	-0.08%
Formosa Petrochemical Corp	-0.52%
Nan Ya Plastics Corp	-0.95%
Formosa Chemicals & Fibre Corp	0.13%
STI Index (Singapore)	-0.81%
Wilmar International Limited	0.00%
Olam International Limited	1.70%
FTSE Bursa Malaysia KLCI (Malaysia)	-0.31%
SSE Composite Index (Shanghai, China)	-0.20%
Jakarta Composite Index (Indonesia)	-0.02%
PT Chandra Asri Petrochemical Tbk	0.36%

Crude prices were recovering on Monday, with Brent crude up by $3.58/bbl, or 4.9%, at $76.30/bbl and US WTI rising $3.72/bbl or 5.5% at $71.87/bbl.  

On 26 November, US WTI crude tumbled by $10.24 on Friday, or 13.1%, to close at $68.15/bbl, declining more than 10.4% in the week, while Brent crude shed $9.50 or 11.6% to $72.72/bbl, representing a weekly decline of more than 8%.

This was the steepest fall in both WTI and Brent prices since April 2020 and marked the crude benchmarks’ fifth consecutive week of losses.

In Asia, Japan is considering further border controls to prevent the spread of Omicron, the country’s Prime Minister Fumio Kishida was quoted by local media as saying on Monday.

Singapore Prime Minister Lee Hsien Loong on Sunday said that the country is tracking developments surrounding the new coronavirus variant “very closely”, adding that the country could dial back its re-opening plans.

Concerns about the Omicron variant rattled investors late on 26 November, sending equity in the US and Europe, as well as oil prices on a downward spiral.

“Omicron is said to be five times more infectious than the Delta variant and confirmed cases have been reported in the UK, Germany, Italy, Netherlands, Australia, Hong Kong, just within three days after it made headlines globally,” Malaysia’s HongLeong Bank said in a note on Monday.

According to the World Health Organization (WHO), it was not yet clear whether Omicron, first detected in southern Africa region, is more transmissible compared with other variants, including Delta.

“WHO is working with technical partners to understand the potential impact of this variant on our existing countermeasures, including vaccines,” it said in a statement.

The WHO has named the strain as a “variant of concern”.

US equities slumped on 26 November, with the Dow Jones Industrial Average ending 2.53% lower – its worst performance so far this year.

Following the discovery of Omicron coronavirus variant, the US announced that it will restrict travel starting Monday from South Africa and seven other southern African countries.

In Europe, both Germany and France’s leading stock market indexes fell by more than 3% on Friday, and UK’s FTSE 100 index ended 3.7% lower.

Focus article by Nurluqman Suratman

Thumbnail photo: Singapore port – 10 November 2020 (By WALLACE WOON/EPA-EFE/Shutterstock)