Bulls and bears

STI closes higher despite Greek default

An escalator runs past a ticker board that indicates stock figures at the Singapore Exchange.
An escalator runs past a ticker board that indicates stock figures at the Singapore Exchange. PHOTO: BLOOMBERG

Investors take cue from overnight gains on Dow to push local index up for second day

Local stocks kept up their rally yesterday despite Greece defaulting on its debt ahead of a referendum this weekend that may decide the country's future in the euro zone.

Investors may have priced in the shock from Greece in the previous selloff, 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 gains, 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 still held firm above 3,320.

Global markets were hit hard on Monday when investors fled after the Greek government announced a week-long bank shutdown.

CMC Markets analyst Nicholas Teo did not find the recovery surprising, saying it is "the start of the year's second half, when market repositioning is to be expected".

Blue chips dominated play, with 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 asked by the Monetary Authority of Singapore about unusual price and volume movements but replied that it was not aware of any reason.

Large property plays also gained. CapitaLand rose four cents or 1.14 per cent to $3.54, and City Developments added nine cents or 0.92 per cent to $9.87.

In a note last week, OCBC Investment Research maintained its buy rating for CapitaLand, which recently said it was set to acquire Danga Bay A2 Island in Iskandar, Johor, giving the group a meaningful foothold in the region, long term.

Outside the STI, IT play Yuuzoo closed 0.5 cent or 1.96 per cent up at 26 cents. It was among the most active counters yesterday, with more than 26 million shares changing hands. PhillipCapital said Yuuzoo's share price has been consolidating and is at a make-or-break level, with 35 cents as the next potential short-term upside target.

Noble Group was also among the top active counters. More than 27 million shares were traded as the commodity play dropped 0.5 cent or 0.66 per cent to end at 75.5 cents.

Mr Teo was concerned by what seemed to be yet another share buyback: "If this is it for Noble's plan to combat share price drop, it's walking a very precarious road."

Overseas, Tokyo was up 0.46 per cent, lifted by further signs of economic recovery in Japan. Kuala Lumpur rose 1.25 per cent - its biggest one-day jump in over six months - after Fitch upgraded Malaysia's credit rating outlook.

China, however, had another torrid day. Shanghai lost 5.23 per cent, despite the government's efforts to calm the market, including plans to allow pension funds to invest in stocks. Hong Kong was closed for a holiday.

A version of this article appeared in the print edition of The Straits Times on July 02, 2015, with the headline 'STI closes higher despite Greek default'. Print Edition | Subscribe