Oil plunge fuels run on energy firms as Asia stocks tumble
Crude has slumped more than 12 per cent since the OPEC on December 4 opted against cutting its output levels, and there are warnings of further pain ahead as the global economy struggles
AFP
AFP, HONG KONG: Energy firms led another stock market sell-off yesterday, but analysts said a fall in oil prices to seven-year lows was driven more by fears over demand and a supply glut than the Paris climate deal.
Crude has slumped more than 12 per cent since the OPEC oil producers group on December 4 opted against cutting its output levels, and there are warnings of further pain ahead as the global economy struggles.
Adding to the unease on trading floors is this weeks Federal Reserve policy meeting that is widely expected to see US interest rates raised for the first time since 2006. On Monday both main oil contracts fell again, with US benchmark West Texas Intermediate down 0.4 per cent and Brent off 0.5 per cent.
Among energy firms Sydney-based BHP Billiton shed 3.5 per cent, Rio Tinto was two per cent lower and Santos lost almost five per cent.
Hong Kong-listed CNOOC sank 1.5 per cent and Sinopec fell 1.4 per cent. Inpex dived 2.9 per cent in Tokyo while JX Holdings was 2.5 per cent off.
But experts said it was unlikely the Paris agreement Saturday to limit global warming to below two degrees Celsius (3.6 degrees Fahrenheit) over pre-industrial levels had any real impact.
CMC Markets chief analyst Ric Spooner said: Its difficult to strip out what impact there has been, if any, given the day already had so many negatives.
That said, its possible that investors will increasingly start to look to the medium- and long-term future of the oil and gas sector.
SBI Securities Nobuyuki Fujimoto said the energy-sector losses came because of a plunge in oil prices, which since June 2014 have fallen from more than $100 a barrel to about $36.
That has a more direct impact on shares than the climate deal, he said.
Global warming is a problem, but it doesnt mean we wont use energy at all. Since its difficult to rely on nuclear power now and renewable energy is limited, we have to use thermal power, Fujimoto said.
Tokyos Nikkei had shed 1.8 per cent by the close, while Hong Kong ended off 0.7 per cent. Sydney slipped two per cent by the close and Seoul gave up one per cent.
All three main indexes on Wall Street had ended in the red Friday.
However, Shanghai surged 2.5 per cent as traders welcomed surprisingly strong Chinese economic data at the weekend. Miners were also boosted by news that Chinas aluminium smelters pledged Friday to halt new mills.
Hong Kong-listed shares in SCMP Group were suspended as it was announced Chinese Internet giant Alibaba would pay US$266 million for the citys South China Morning Post newspaper.
The Chinese firm announced the purchase on Friday, saying it would use its digital expertise to provide comprehensive and insightful news and analysis of the big stories in Hong Kong and China.
Also in Hong Kong, conglomerate Fosun International plunged 9.5 per cent as it resumed trading after it said last week its head was cooperating with authorities over an investigation. There were no details about what the inquiry was in connection with.
The firms billionaire chairman Guo Guangchang, dubbed Chinas Warren Buffett, reappeared Monday after he went missing Thursday.
In early European trade London added 0.4 per cent, Frankfurt rose 0.64 per cent and Paris gained 0.5 per cent.
