Singapore shares dragged below 3,300 as global equities sell-off leads to slump

Pedestrians exit an escalator that runs past an electronic screen and ticker board that indicates stock figures at the Singapore Exchange (SGX) headquarters in Singapore, on Jan 21, 2015. -- PHOTO: BLOOMBERG 
Pedestrians exit an escalator that runs past an electronic screen and ticker board that indicates stock figures at the Singapore Exchange (SGX) headquarters in Singapore, on Jan 21, 2015. -- PHOTO: BLOOMBERG 

SINGAPORE - A continued sell-off in global equities led Asian stocks lower, dragging Singapore shares below the 3,300 support level again.

As at 2.27 pm, the benchmark Straits Times Index sank to as low as 3,295.11, down 28.02 points, or 0.8 per cent.

Asian shares slumped for a second day, led by Chinese equities as investors eyed the outcome of a two-day Federal Reserve meeting on monetary policy, which begins today; and euro-area finance ministers discuss Greece's debt crisis on June 18.

The Shanghai Composite Index retreated 3.3 per cent amid concern a flood of share sales may lure funds away from existing equities.

Hong Kong sank 2.3 per cent, the Hang Seng China Enterprises Index slipped 0.9 per cent, Japan dipped 0.6 per cent.

IG market strategist Bernard Aw believes fears over the fallout resulting from a Greek default and possibly an exit from the European Union are overblown.

"According to Nomura, international banks' exposure to Greece had fallen 79 per cent to US$46 billion (S$61.7 billion) as of last year from US$217 billion in 2009. International exposure to Greek debt was down 80 per cent to EUR 42.7 billion in 2014 from EUR 219 billion in 2009," he said.

"So, it appears that a Greek debt meltdown may not be catastrophic for the EU, but why did global equities react in such an ostentatious manner?" he asked.

"To a large extent, the worry lies in the possibility that the credibility of the EU may have suffered substantially, should Greece be allowed to go into cardiac arrest. Furthermore, a Grexit may set the stage (and precedent) for other vulnerable EU countries such as Spain and Portugal to consider whether staying in EU is right for them," he added.

gleong@sph.com.sg