Shares lifted by Greece deal; gains likely capped at 3,100

Singapore shares inched 0.28% higher by midday on Friday, lifted by news debt-ridden Greece reached a deal with international lenders for an austerity plan intended to avoid looming bankruptcy.

Container shipping firm Neptune Orient Lines (NOL) (NEPS.SI) led gains in the benchmark index on hopes that container freight rates may rebound as the peak season nears and on bargain hunting after being over-sold.

By the midday break, the Straits Times Index (STI) <.FTSTI> was up 8.52 points at 3,053.24. The total value of shares traded in the morning session was $554.9 million, fractionally higher than $554.4 million on Thursday.

 

However, gains in equities could be short-lived as many analysts see the Greek deal as a short-term fix for a long-term crisis.

 

“While things are slowly improving in Europe, it’s not out of the woods yet. Though Greece has found a resolution, I don’t see an easy solution from preventing more debt problems from happening, for instance in other countries like Portugal and Ireland,” said Carey Wong, an investment analyst at OCBC Investment Research.

 

Greece reached an agreement with EU and IMF leaders on additional tax hikes and spending cuts to plug a 3.8 billion euro funding gap, paving the way for the disbursal of a much needed aid package in July.

Wong said he expects the STI to consolidate in 3,000-3,100 range in the near-term, as there is unlikely to be further positive catalysts going forward.

 

Chinese shipbuilder Yangzijiang (YAZG.SI) rose as much as 3.6%, buoyed by improving sentiment after it signed a letter of intent to build eight container ships.  

 

By the midday, shares of Yangzijiang were 2.2% higher at $1.42 with over 14.4 million shares changing hands.

 

NOL rose as much as 5.4% on Friday, on expectations container freight rates may rebound as the peak season approaches.

 

“NOL has been sold down quite a lot, so some investors see the current share price as quite attractive to accumulate on hopes that container freight rates will rebound as we approach the peak season of July to about October,” said an analyst.

 

NOL shares were 4.1% higher at $1.53 at the lunch break, with nearly 12.3 million shares traded.  

 

Engineering firm PSL Holdings (PSLL.SI) also outperformed the market and surged 7.6% on continued speculation of a possible stake sale.