PENNY stocks were heavily traded in yesterday's session as the Straits Times Index, which dropped 78 points on Tuesday and Wednesday, managed a 57.22-point or 2 per cent rebound to 2,970.38.

Turnover excluding foreign currency issues was 2.3 billion units worth $1.4 billion, for an average of 60 cents per unit.

Top Global at just over one cent and its warrants at around 0.6 cent were among the day's most active counters. UPP, which sprang into play on Wednesday on news that a Malaysian tycoon has bought a 26.9 per cent stake, rose one cent to 23 cents with 159 million traded. Other active penny stocks included MDR at one cent and Rowsley at 10.6 cents.

Brokers reported a generally quiet day, with the market returning to its 'business as usual' state, namely, churning of speculatives by house traders and dealers trading on their own accounts. Tuesday's sharp sell-off, according to one observer, reminded players that the market could go down as well as up.

The rise in stocks was because of Wednesday gains in Western markets, which reportedly came after worries of a Greek default faded when a swap deal was announced and after an encouraging private-sector jobs report was released in the US.

Rises in the three banks contributed the most towards the STI's rise. DBS's rise of 42 cents to $14.30, for example, added 8 points. In all, banks added 21 points.

Among second-liners in play was offshore marine firm Ezion Holdings, following news of a US$65.7 million contract with a state-owned China enterprise. The stock, which added 4 cents on Wednesday, rose another 4 cents to 91 cents yesterday with 36 million traded.

In its 'buy' on Ezion, OCBC Investment Research said the estimated return on equity of the deal is attractive at about 55-60 per cent, but there are certain risks in the project, such as yard execution risk, since the unit will be built in a Chinese yard.

'China's offshore wind industry is gaining momentum and Ezion's liftboat will be used for installation of offshore wind turbines,' said the broker.

'We tweak our EPS estimates to account for the new contract as well as the recent placement of new shares which has received SGX's approval-in-principle, reducing our fair value estimate to $1.05 (previously $1.18). Maintain 'buy'.'

In its daily strategy yesterday, Ideaglobal said it believes the risk regarding the Greek bond swap is 'asymmetric'.

'If the swap goes smoothly, avoiding a triggering of a credit event, we believe 'risk on' would see a bounce; however, we wouldn't experience an astounding shot higher,' it said. 'If we go through a bumpy ride, with some delays announced, we would see a huge downside shift towards risk aversion.'

In its March 7 Liquid Insight, Bank of America-Merrill Lynch (BoA-ML) said the headline news that China's government has revised its growth target from 8 to 7.5 per cent has re-ignited concerns that a China slowdown may yet destabilise Asian economies and markets.

'We remain skeptical of this and view this downward revision more as recognition that China's trend growth rate is slowing due to demographics and structural reasons, rather than an imminent cyclical slowdown,' said BoA-ML. 'As such, this 7.5 per cent growth target revision should be seen more as a lower bound on growth.'