Chemical stocks hammered in Tokyo

Abstract

Japanese chemical stocks have generally underperformed the declining Tokyo stock market so far this year. Although the stock market has lost 7 to 8% of its value since the end of December, stock prices of some of Japan's largest chemical firms have declined as much as 14%. poor performance of Japanese chemical stocks becomes even more apparent when tracked over the past three months. Some companies' stock prices have declined more than 25% since the end of October, substantially underperforming the market. One exception is Shin-Etsu Chemical, a company whose stock price, in contrast, has been increasing steadily for the past year. Companies with a large exposure to petrochemicals have been particularly hard hit, says Nicholas Smith, chemical sector analyst at Jardine Fleming Securities in Tokyo. The problem is that we are entering a downturn in the petrochemical industry. Also, Japanese chemical companies have significant competitive problems. During the past four years, they have made very little m...