Market and product

Shares of petrochemical firms in Asia were trading mostly lower on Monday as investors are wary that the deadly coronavirus outbreak will take a heavy toll on the Chinese economy.

Some factories in China were scheduled to resume operations on 10 February after an extended Lunar New Year holiday, but most are expected to remain shut in the near term as death toll from the novel coronavirus (2019-nCoV) in the country now at more than 900.

At 03:40 GMT, PetroChina was down 0.38% and Sinopec Shanghai Petrochemical inched up 0.28% in Shanghai.

Chinese bourses were weak, with the Shanghai composite index was down 0.20%, while the Shenzhen composite index retreated by 0.22%.

In Hong Kong, China Petroleum & Chemical Corp was trading 0.48% higher, while the key Hang Seng index slipped by 0.8%.

In Japan, Mitsui Chemical fell by 1.37%, while and Asahi Kasei Corp slumped 4.55%, as the benchmark Nikkei 225 index slipped by 0.21%.

In Singapore, oleochemicals producer Wilmar was down by 1.49%, with the Straits Times Index slipping by 0.47%.

China’s central bank will start offering its first yuan (CNY) 300bn tranche of special re-lending funds on Monday as part of measures to support firms fighting the coronavirus epidemic.

As of early Monday, the total 2019-nCoV cases in China stood at 40,171, with 908 deaths recorded, surpassing the death toll of the severe acute respiratory syndrome (SARS) epidemic in 2002-2003.

"There is no denying the fact that there will be an impact on economic growth
which will be felt not only in China but possibly globally," Japan's Nomura Global Markets Research said on Monday.

China is the world’s second-biggest economy.

"We believe that there is considerable uncertainty around the impact of novel coronavirus outbreak on not only economic growth, but also on supply chains, and consequently on corporate earnings," it said.

The impact of coronavirus on the Chinese economy in 2020 is likely to be more significant than that during SARS, with China's first-quarter GDP growth projected to decline to 3.8%, before rebounding to 6.4% in the second quarter, Nomura said.

Ratings firm Fitch in a note on Monday said coronavirus outbreak presents China’s leadership with its most serious political challenge in decades, ratings firm Fitch said on Monday.

“China’s political priority will be developing a strategy and implementing tactics to confront the virus and its fallout so as to preserve the leadership credentials of the Party. This will be time-consuming and resource-intensive,” James McCormack, Fitch's global head of sovereign ratings.

“Short of an unforeseen exogenous crisis, it is hard to imagine international events of any sort being given a higher priority in Beijing. In the short term, at least, an inward orientation among Chinese policymakers is inevitable,” he added. - ICIS -