FEARS over the seemingly inevitable Greece default knocked Asian markets yesterday, with investors expecting more turmoil to come as the week unfolds.
The concerns left the benchmark Straits Times Index down 40.72 points, or 1.23 per cent, to 3,280.18, below the 3,300-point support level that has held up well since early January.
It was a similar story across the region. Shanghai dived 3.34 per cent, Hong Kong dropped 2.61 per cent, the Nikkei was off 2.88 per cent and Kuala Lumpur ended 1.08 per cent lower.
CMC Markets analyst Nicholas Teo told The Straits Times: "The key event to watch right now is whether the Greek and euro-zone officials can come to a last-minute deal. Historically, this would often be the case. But... it's best that investors square their positions and take their money off the table this week."
Remisier Desmond Leong also stressed caution: "Barring a turnaround announcement made before the deadline, the local market will continue to drift lower, and investors will likely take profit and exit the market at the sight of any recovery. I don't see a sustained rebound, at least until past next week."
The bearish backdrop sent 28 out of 30 blue chips down, with embattled Noble Group leading the way, losing four cents, or 5.26 per cent, to 72 cents.
This was despite of what appeared to be yet another share buyback by the commodity firm, with about 34 million shares changing hands yesterday, putting it among the most active counters.
ComfortDelGro dropped 10 cents, or 3.12 per cent, to $3.11. The sell-down on the transport play continued as investors took profit after its 52-week high of $3.24 last Thursday.
CapitaLand fell 10 cents, or 2.86 per cent, to $3.40.
The only blue chips to buck the trend were Olam International, up one cent, or 0.54 per cent, to $1.875, and Singtel, which ended flat at $4.13.
Despite the market pain now, there may be an upside to the Greek crisis, Mr Leong noted.
"If Greece defaults, it may actually be a good thing. The markets have been jittery on the news for a long while now. A default will certainly shock the market, but it will also allow it to regain its footing."
Outside the STI, film producer mm2 Asia was up 5.5 cents, or 12.09 per cent, to 51 cents. This came as the Catalist-listed company, which produced local hit films such as Ah Boys To Men, announced yesterday that it will issue up to $2.875 million in convertible bonds that will be due on June 30, 2017.