Asia petrochemical shares tumble on recession fears

SINGAPORE (ICIS)–Shares of petrochemical companies in Asia tumbled on Wednesday, tracking losses in regional bourses caused by a broad-based Wall Street sell-off overnight, on recession fears as the US Federal Reserve is widely expected to continue its aggressive interest rate hikes to tame inflation.

At 02:20 GMT, Asahi Kasei was down 2.01% in Tokyo, Lotte Chemical Corp fell 2.25% and Formosa Petrochemical Corp (FPCC) was 1.09% lower in Taipei.

Japan’s benchmark Nikkei 225 was down by 2.26%, Hong Kong’s Hang Seng Index fell by 2.43% and Singapore’s STI Index was lower by almost 1%.

Company/Stock Exchange at 02:20 GMT	% Change
Nikkei 225 (Japan)	-2.26%
Asahi Kasei Corp	-2.01%
ENEOS Holdings, Inc.	-0.37%
Mitsubishi Chemical Holdings Corp	-1.62%
Mitsui Chemicals, Inc.	-1.43%
HANG SENG INDEX	-2.43%
China Petroleum & Chemical Corp	-1.68%
PetroChina Company Limited	-0.85%
KOSPI Composite Index	-1.54%
OCI Company Ltd.	-0.94%
SK Innovation Co., Ltd.	-2.34%
LG Chem, Ltd.	-0.75%
Lotte Chemical Corp	-2.25%
Hanwha Corporation	-1.69%
TSEC weighted index (Taiwan)	-1.60%
Formosa Petrochemical Corp	-1.09%
Nan Ya Plastics Corporation	-1.16%
Formosa Chemicals & Fibre Corp	-1.44%
STI Index (Singapore)	-0.98%
Wilmar International Limited	-1.48%
FTSE Bursa Malaysia KLCI (Malaysia)	-0.52%
SSE Composite Index (Shanghai, China)	-0.68%
Jakarta Composite Index (Indonesia)	-0.94%
PT. Chandra Asri Petrochemical Tbk	-2.37%
SET Index (Thailand)	-0.28%
PTT Global Chemical Public Co	0.55%
Indorama Ventures Public Co	-0.59%
IRPC Public Co	0.60%
The Siam Cement Public Co	-1.12%
Thai Oil Public Co	-0.89%

“Volatility in regional equity, bond and currency markets looks set to return after relative calm in the past few sessions,” Singapore-based UOB Global Economics & Markets Research said in a note.

The Fed’s aggressive interest rate hikes to combat inflation will further slow down economic activity in the world’s biggest economy and would weigh heavily on export-reliant Asia.

Market players expecting the Fed to hike interest rates by another 75 basis points (bps) on 20-21 September, following similar moves in June and July.

“Expectations for a 50bps was completely squashed, while talks on an outsized 100bps hike emerged,” Malaysia-based HongLeong Bank said in a note.

Wall Street on 13 September recorded its worst day in more than two years as a high inflation rate for August fueled bets on another round of hefty interest rate hike by the US Federal Reserve.

US’ August consumer inflation stood at a higher-than-expected rate of 8.3%, although down from July’s 8.5%. Excluding volatile food and energy costs, the core consumer price index (CPI) in August increased by 6.3% year on year.

Tuesday’s sell-off in US stocks erased nearly all the gains in the S&P 500’s biggest four-day surge since June, shedding more than 4.3% at the close of trade; while the Nasdaq lost 5.2%; and the Dow Jones Industrial Average ended 4% in the red.

Focus article by Nurluqman Suratman

Thumbnail image: China Shandong Qingdao Port – 29 July 2022 (Source: Xinhua/Shutterstock)

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