SINGAPORE - The tides have turned, or so it seemed, as China shares bounced back yesterday on the back of new government measures to stop panic-selling which had led as stocks to crash in the last three weeks.
The country'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 rise since March 2009.
Taking its cue from China's rebound, Hong Kong's Hang Seng Index also jumped 3.73 per cent, while the Nikkei 225 in Japan edged up 0.6 per cent.
Singapore shares, however, 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 sentiments at Wall Street, where the Dow Jones Industrial Average sank 1.47 per cent on Wednesday.
An unexpected 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 the 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 Eurozone.
Much of the selloff here yesterday was led by the three local banks, which posted losses in their share prices.
DBS Group Holdings lost 14 cents to S$20.51, while United Overseas Bank slipped 11 cents to S$22.82. OCBC Bank also shed five cents to S$10.10.
Other laggards included telco giant Singtel, which slumped seven cents to S$4.26, and the Singapore Exchange, which dropped seven cents to S$7.98.
Outside of the blue chips, Singapore Post rose one cent to S$1.915.