China rebounds, but STI keeps sliding
CHINA'S battered stock markets bounced back yesterday on the back of new government measures to stop panic-selling, but the respite failed to spread to Singapore.
China's state margin lender said on Wednesday it was broadening its bailout buying to include small-cap stocks and mutual funds, in addition to blue chips.
This boosted investor confidence and sent the Shanghai Stock Exchange Composite Index surging 5.76 per cent - its biggest one-day rise since March 2009.
Taking its cue from the mainland, Hong Kong's Hang Seng Index jumped 3.73 per cent while Japan's Nikkei 225 edged up 0.6 per cent.
"As China beefs up its efforts to rescue the market...market sentiment is recovering slightly," Shenwan Hongyuan Group analyst Qian Qimin told Bloomberg News.
"The rise today may help ease some selling pressure...but whether it's sustainable will depend on what policies are coming next."
However, Singapore shares were left out of the party. The Straits Times Index pared 17.59 points, or 0.54 per cent, to 3,267.4.
This mirrored overnight sentiment on Wall Street, where the Dow Jones Industrial Average sank 1.47 per cent on Wednesday.
A trading glitch at the New York Stock Exchange also halted trading for close to four hours.
IG market strategist Bernard Aw noted that investors here are still treading cautiously. "Around 50 per cent of China's A-shares are still under trading halts, which suggests that there may be considerable selling interest still pent-up. This made me wonder whether the rally has any legs to stand on."
He added that the unfinished business in Greece is "still sending jitters across the market".
Greece was supposed to deliver its new reform proposals last evening to secure a bailout deal with creditors and stave off a possible exit from the euro zone.
"It's hard to tell what is going to happen where politics are concerned," said Mr Aw.
Much of the sell-off here was led by the three local banks.
DBS Group Holdings lost 14 cents to $20.51, while United Overseas Bank slipped 11 cents to $22.82. OCBC Bank shed five cents to $10.10.
Their weakness came after the minutes of the United States Federal Reserve's meeting last month showed members wanted more signs of an economic recovery before raising rates, which means that the rate hike - touted to be in September - may be pushed back.