Investors on edge over Greece, China

BAILOUT TALKS: Greek Finance Minister Yanis Varoufakis (left) and Eurogroup head Jeroen Dijsselbloem during the Eurogroup meeting of finance ministers on Monday to discuss a cash-for-reforms deal for Greece.


    May 13, 2015

    Investors on edge over Greece, China

    SELLDOWNS in Europe and on Wall Street sent Singapore shares into the red yesterday as investors worried over developments in Greek bailout talks and slowing growth in China.

    The bearish mood fuelled profit-taking on key blue chips and sent the benchmark Straits Times Index down 28.47 points to 3,442.33, with 1.31 billion shares worth $1.09 billion changing hands.

    Singtel dropped 0.9 per cent or four cents to $4.32 with 16.5 million shares traded, while CapitaLand shed nearly 2 per cent or seven cents to $3.51 on trade of 16.6 million shares.

    Banking counters DBS slipped 1.3 per cent or 27 cents to $20.86, OCBC dipped 1.1 per cent or 12 cents to $10.39 and United Overseas Bank fell 1.3 per cent or 31 cents to $24.09.

    Jardine Matheson also weighed down the market, falling 1.1 per cent or 71 US cents (95 Singapore cents) to US$61.50, while Jardine Cycle & Carriage dipped 1.1 per cent or 46 cents to $40.73.

    "Europe opened weaker as it is unclear if there will be a successful outcome for Greek aid talks," remisier Alvin Yong said.

    Investors took a pessimistic view as finance ministers met to discuss a cash-for-reforms deal for Greece, even though the country said it made a payment of about 750 million euros (S$1.1 billion) to the International Monetary Fund.

    The Dow Jones Industrial Average slipped 0.47 per cent on Monday, sparking falls in Hong Kong and some markets in South-east Asia. Hong Kong's Hang Seng Index fell 1.1 per cent while the Hang Seng China Enterprises Index of mainland stocks traded in the city lost 1.5 per cent.

    Meanwhile, the rally in Chinese equities continued, even as concerns linger over the health of the global economy. China's Shanghai Composite Index climbed 1.6 per cent yesterday amid speculation that lower borrowing costs will bolster domestic consumption.

    "There are concerns over whether the US growth momentum can be sustained and whether more stimulus is needed to prop up and help China meet its economic growth target of 7 per cent," Mr Yong said.

    The People's Bank of China (PBOC) cut interest rates over the weekend after recent economic data, including exports and inflation, showed weakening demand.

    Schroders emerging markets economist Craig Botham said: "In a move that should prove helpful at the margin, the PBOC delivered another cut to the benchmark lending and deposit rates.

    "We expect this aggressive easing trend to accelerate during the rest of this year...One implication might be that last month's data is weaker than expected, certainly the trade and Purchasing Managers Index data so far would suggest as much. We think gross domestic product growth is likely to slow further in the second quarter."