Bulls and bears

Markets turn cautious on Greek uncertainty

Traders monitoring Fed chief's testimony for further hints on timing of US rate hike

Singapore shares lost some of their sizzle as Chinese stocks retreated after a three-day rally, and as initial relief over Greece's conditional bailout deal gave way to caution over whether it will be sealed by today's deadline.

Investors were uncertain despite assurances from Greek Interior Minister Nikos Voutsis that Prime Minister Alexis Tsipras could muster enough parliamentary votes to pass legislation to enact harsh austerity measures required for the bailout amid internal dissent.

The benchmark Straits Times Index edged up 5.28 points to 3,316.50, with some 1.2 billion shares worth $835.3 million changing hands.

Singtel fell 1.14 per cent or five cents to $4.32, while banking counters DBS Group Holdings rose 0.5 per cent or 10 cents to $21.05 and United Overseas Bank stayed flat at $22.96.

"There is belief that Greek PM Alexis Tsipras may hobble along the process, as the harsh reforms are expected to pit him against his 'anti-austerity' party. Should Mr Tsipras survive (today's deadline), he will need to begin discussions on a bridge financing deal to tide over the debt-ridden country until the bailout monies are disbursed. This could be another round of tough talks. By all means, the Greek saga is here to stay for a while longer," IG market strategist Bernard Aw said.

  • Markets highlights

  • 1. The FTSE Singapore Index has recorded a yield of 3.5 per cent, making it the highest among the 11 indices in Asia. The index has 41 constituents, most of which are Straits Times Index components with the rest from the FTSE ST Mid Cap Index.

    2. CapitaMall Trust (CMT) is buying Bedok Mall from CapitaLand for $783.1 million. CMT will pay it $464 million, including issuing 72 million new units in CMT. An existing CMT loan of $319.1 million will be repaid by CapitaLand.

    3. The second-quarter earnings season is kicking off with the Reits. Soilbuild Business Space Reit recorded a distribution per unit (DPU) of 1.615 cents for the quarter ended June 30, 7.7 per cent higher than the previous year's amount.

    4. Retail investors are more confident in their outlook on the stock market and the economy in the next six months, says the latest half-yearly survey of investor sentiment by JP Morgan Asset Management.

    5. Raffles Education chairman and chief executive Chew Hua Seng has bought 50,000 shares, shelling out around $15,198.50 in the process. The shares rose half a cent to 30.5 cents yesterday.

Meanwhile, traders are also monitoring congressional testimony by US Federal Reserve chief Janet Yellen today for further hints on the timing of an interest rate hike.

"Now that the worst-case scenario for Grexit is off the table, market will focus on the timing of a US interest rate hike," a remisier said.

But investors likely want to take on risk given the short trading week, he said. The Singapore market is closed for the Hari Raya Puasa holiday on Friday.

Elsewhere in Asia, the mood was mixed. The Shanghai Composite Index dropped 1.16 per cent and Hong Kong dipped 0.4 per cent, while Japan rose 1.47 per cent.

"We could see a period of consolidation (in China) over the next few weeks, as the authorities gradually unwind the harsh support measures. Further, China will need to repair the negative perception of state intervention in the stock markets for the first two weeks of July," Mr Aw said.

Oil and gas plays were weighed down by lower oil prices after Iran and world powers reached a nuclear deal. This could mean Iranian oil would flow back into the market, exacerbating an oversupply problem. Brent crude fell to US$56.91 a barrel, while West Texas Intermediate slid to US$51.11 a barrel.

Sembcorp Marine dropped 0.4 per cent or one cent to $2.81, Kris Energy slipped 4.8 per cent or two cents to 39.5 cents, Rex International fell 1.5 per cent or 0.3 cent to 19.2 cents. Ezra shed 0.6 per cent or 0.1 cent to 15.9 cents, with 51.3 million shares traded.

A version of this article appeared in the print edition of The Straits Times on July 15, 2015, with the headline 'Markets turn cautious on Greek uncertainty'. Print Edition | Subscribe