IT WAS unthinkable over the weekend when investors worldwide were panicking over Brexit but global markets have almost recouped their losses.
London's FTSE 100 racked up another 2 per cent gain in early trading yesterday to end above 6,260.
Overnight, Wall Street was similarly buoyant, with Dow Jones Industrial Average up 1.57 per cent.
Asia had a region-wide rally yesterday, with the Straits Times Index on a two-day run, closing up 36.20 points or 1.31 per cent at 2,792.73, just below the 2,793 close before the Brexit vote.
Shares worth $939.5 million were traded.
Shanghai rose 0.65 per cent, Hong Kong gained 1.31 per cent, Nikkei added 1.59 per cent, Kuala Lumpur closed up 0.50 per cent and Sydney added 0.77 per cent.
Investors are now calming down, having realised they over-reacted, Bank of Singapore investment strategist James Cheo told The Straits Times.
"The sell-off after Brexit was excessive because it's hard to have the right economic assessment for an unprecedented event like that. Part of the recovery is also from investors pricing in potential central bank actions."
These scenarios include more quantitative easing by both the European Central Bank and the Bank of England, as well as a further delay to rate hike by the United States Federal Reserve.
Mr Cheo added: "I think it's best to stay defensive and not over-reach. Trim your overweight exposure to Europe and European banks, and stick with emerging market high-yield or investment-grade bonds for now until the dust settles."
With local investors back into the fray, 24 of the 30 STI component stocks rose yesterday.
Jardine Cycle & Carriage was the top gainer, rising $2 or 5.97 per cent to $35.50.
The banking sector also ended higher.
DBS closed up 23 cents or 1.5 per cent at $15.53, OCBC rose 10 cents or 1.19 per cent to $8.49. United Overseas Bank added 27 cents or 1.53 per cent to $17.96.
Market watchers deem the three banks to be mostly insulated from Brexit due to minimal European exposure, but Moody's remains cautious over their credit quality outlook.
"For the three banks, overseas portfolios have outgrown their domestic portfolios in recent years, leaving them vulnerable to the current subdued outlook for global and regional economies in general," the rating agency said yesterday in its latest credit report on Singapore.
It added that the banks' non-performing loans will continue to come from their significant exposure to the energy industry.
Offshore and marine plays were part of yesterday's gainers.
Keppel Corp added 11 cents or 2.08 per cent to $5.41 and Sembcorp Marine rose half a cent or 0.32 per cent to $1.545, likely benefiting form benchmark Brent futures rising for the second straight day to around US$49 a barrel.
Only four STI counters closed lower, including Golden Agri-Resources, down one cent or 2.9 per cent to 33.5 cents, and Wilmar International, off one cent or 0.31 per cent to $3.23.
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