STI up again despite Greek crisis
LOCAL stocks continued to rally yesterday, despite Greece officially defaulting on its debt ahead of a referendum this weekend that may decide whether it will stay in the euro zone.
Investors may have priced in the shock from Greece in the previous sell-off, market watchers said, as Wall Street also gained after a volatile day, with the Dow Jones Industrial Average up 0.13 per cent.
Taking its cue from overseas, the benchmark Straits Times Index (STI) rose for the second day, closing 13.81 points or 0.42 per cent higher at 3,331.14. It rose as much as 0.7 per cent in early trading to 3,340 before the momentum slowed, but the STI still held firm above 3,320.
Remisier Desmond Leong said: "The market has been stronger than expected, which is a bit of a surprise as I expected more kneejerk reaction. This could mean that the markets have priced in the shock from the Greek debt crisis."
Global markets were hit hard on Monday when investors took money off the table, after the Greek government announced a weeklong bank shutdown of its banking system.
But CMC Markets analyst Nicholas Teo did not find the subsequent recovery surprising, saying: "It's now at the end of the month and the start of the year's second half, when market repositioning is to be expected.
"Part of this action may be driven by big funds overseas that are coming here, after selling down on Chinese markets fiercely in the past week."
Blue chips were the dominant market force, with the Singapore Exchange gaining the most. The bourse operator closed 35 cents or 4.47 per cent higher at $8.18, with more than seven million shares changing hands.
SGX was questioned by the Monetary Authority of Singapore for unusual price and volume movement, but replied that it was not aware of any reason.
Still, SGX will stay under scrutiny in the coming days as the investors awaits the arrival of SGX's new chief executive, Loh Boon Chye.
Large property plays also gained. CapitaLand rose four cents or 1.14 per cent to $3.54, while City Developments added nine cents or 0.92 per cent to $9.87.
Overseas, Tokyo was up 0.46 per cent, lifted by further signs of economic recovery after a survey by the Bank of Japan revealed improved sentiments among manufacturers. Kuala Lumpur gained 1.25 per cent - its biggest one-day jump in over six months - after Fitch upgraded Malaysia's credit rating outlook.
However, the Chinese markets had another torrid day. Shanghai lost 5.23 per cent, as market jitters continued despite the government's efforts to calm the market, including plans to allow pension funds to invest in stocks.