STI joins regional markets in rally amid Greek default

Pedestrians walking past an electronic stock board in Tokyo.
Pedestrians walking past an electronic stock board in Tokyo.PHOTO: BLOOMBERG

SINGAPORE - Asian markets continued their rally from yesterday, with local stocks up strongly in the early trading hours to surprise traders who had expected a more bearish market after the news that Greece has officially defaulted on its debt overnight.

The benchmark Straits Times Index (STI) was up 21.96 points or 0.66 per cent to 3,339.29 as of noon on Wednesday (July 1), stretching the rebound the day before when the index surged 1.13 per cent.

That means the local market has almost fully recovered from the drop last week amid fears around the Greek debt crisis, remisier Desmond Leong noted.

"The market has been stronger than expected, which is a bit of a surprise for me as I expected more kneejerk reaction. This could mean that the market has already priced in the shock from the Greek debt crisis."

Many may also be betting on a positive outcome from the referendum in Greece this weekend to decide whether to accept austerity measures proposed by creditors, he added. A "no" vote will potentially lead to Greece's exit from the Eurozone.

Meanwhile, regional markets are also taking the concerns around Greece in stride, driven by positives of their own. Kuala Lumpur has gained 1.71 per cent by noon as investors cheered Fitch Ratings' decision to maintain Malaysia's sovereign rating. This gave both its stocks and weak currency a boost, as Malaysia ringgit rose 0.33 per cent against Singapore dollar at the same time.

Japan's benchmark Nikkei moved up 0.29 per cent, helped partly by official survey that revealed still improving sentiments among the country's major manufacturers.

In China, the Shanghai Composite is having another volatile session, with its early hour gains wiped off to drop 0.40 per cent by noon. Hong Kong's market is closed for public holiday.

The Chinese government is doubling its efforts to calm the jittering stock markets, announcing this week draft rules to allow pension funds to invest in equities.

In his outlook briefing last week, Standard Chartered wealth management chief strategist Steve Brice said there's still upside to Chinese stocks despite the giddy heights they've reached over the past year. The government is unlikely to allow the market to burst, he noted, as a bullish stock market will help the corporate sector deleverage.