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Singapore shares close higher after two days of heavy selling
THE Straits Times Index (STI) on Thursday closed at 3,091.78, managing to regain 30.29 of the 136 points it had lost during Tuesday and Wednesday's selloff.
The broad market excluding warrants recorded 256 rises versus 190 falls so the index's bounce did not reflect widespread strength, while volume amounted to 1.44 billion units worth S$1.4 billion, of which S$1.03 billion or 74 per cent was done in the 30 STI components.
Stock markets around the world have been hit this week by a shock move by the Chinese authorities to devalue the yuan, either because it will help boost exports and revive a slowing economy or because with a market-determined exchange rate the yuan would be given the Special Drawing Rights status by the International Monetary Fund, or both.
Whatever the case, volatility in the currency market has hit stocks, though a stable Wall Street on Wednesday probably helped calm nerves.
Banks were among the worst hit during Tuesday and Wednesday's slide, so it came as no surprise that they led the STI higher on Thursday, their combined gains adding about 20 points to the index.
Macquarie Warrants in its daily newsletter said Macquarie Equities Research believes that in a base-case scenario, the lower yuan is only slightly negative for Singapore bank earnings as a result of lower business volumes and translation losses.