Singapore shares ended higher in tandem with gains in Asia Friday, as investors cheered measures announced by euro-zone leaders to address persistent worries about the region's debt crisis.
The measures, which were unveiled after a late night meeting in Brussels Thursday, include allowing direct recapitalization of the region's banks, and open access to the region's rescue fund to countries not already part of the bailout program.
The 30-share Straits Times Index ended 1.1%, or 31.63 points, higher at 2,878.45 after the news, extending its rally into a third straight day. But the index closed well off its intraday high of 2897.96. The STI closed up 1.8% for the week, but ended the second quarter down 4.4%.
While "the fact that [euro-zone leaders] can actually get their act together" is positive, the question is "how long does the euphoria last?" said Selena Ling, head of treasury research at OCBC. "It's one step to get an agreement; it's more steps to actual implementation." Nonetheless, the latest European Union summit could still prove to be a sea change as the proposals on the table, such as for banking, are more far-reaching than previous summits, Ms. Ling said.
"I haven't seen any final decision or outcome," said Emil Wolter, head of Asian equity strategy at Macquarie. "We've had about 19 summits in the last two years. The net impact is quite modest...I'd be hesitant to take a strong view that this is the one that's going to turn the tide."
Volume was higher at 1.62 billion shares compared to 1.4 billion shares on Thursday, while gainers eclipsed decliners 292 to 80.
Property developers were among the best performers in the broad-based rally, in which all but one STI-component ended higher. City Developments leapt 3.5% to a near two-month high at 11.20 Singapore dollars, while rival CapitaLand pushed 2.3% higher to S$2.70. Shopping mall developer CapitaMalls Asia meanwhile rose 1.6% to S$1.565.
The risk rally also lifted counters sensitive to economic cycles. Commodity trader Noble Group rose 1.8% to S$1.115, while container shipper Neptune Orient Lines gained 1.8% to S$1.105. Palm oil producer Golden Agri-Resources ended up 1.5% at S$0.670.
Banks too made headway, led by United Overseas Bank's 1.4% rise to S$18.66. Oversea-Chinese Banking Corp. gained 1% to S$8.79, while DBS Group ended up 0.2% at S$13.87.
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