VINACHEM

HA NOI — Investor sentiment on the nation's stock markets improved throughout last week, helped by measures by the State Bank of Viet Nam to ease interest rate pressures, lifting the VN-Index to a close on Friday of 517.46 points, a gain of 1.36 per cent from the previous week.

On the HCM City Stock Exchange, the average daily value of trades rose by 26.5 per cent from the previous week's average, to over VND2 trillion (US$105.3 million), while average daily volumes grew by 29.6 per cent to nearly 54.3 million shares.

On the Ha Noi Stock Exchange, the HNX-Index increased by a far more impressive 4.09 per cent over the previous week's close to end Friday's session at 170.83 points.

Average daily trading value on this market soared by 89.8 per cent to over VND1.5 trillion ($79 million), while the average volume grew by 88.8 per cent to 43.4 million shares.

The northern bourse's liquidity was boosted by rising interest in shares in the petroleum and construction sectors, including PetroVietnam Construction Co (PVX), Vinashin Petroleum Investment and Transport Co (VSP), PetroVietnam Nghe An Construction Co (PVA), Vinaconex (VCG) and Song Hong Construction Co (ICG). Both sectors have enjoyed strong earnings and boosted by rumours of rising prices in the near future.

Foreign investors concluded the week as net buyers on both bourses, responsible for a net buy of 7.4 million shares, worth a combined VND507 billion ($26.7 million).

The VN-Index last week managed to advance across five sessions, although gainers were mostly penny stocks, while blue chips saw mostly sluggish trading and minimal gains, said FPT Securities Co analyst Tran Quang Vinh in the firm's weekly report.

However, Vinh said, "the prospect of looser monetary policies helped rally investor psychology last week, lifting shares on both bourses."

The State Bank of Viet Nam injected nearly VND14 trillion ($737 million) into the nation's banking system last week through the open market operations in an effort to improve the system liquidity and hold down skyrocketing lending rates.

Following the move, some leading banks confirmed they would lower commercial lending rates to 14-15 per cent per year.

As listed companies continue to release first-quarter business results this week, a number of analysts believed that the market would continue to rally and regain the 520-mark.

An influx of capital into the stock market was expected in the near future as other investment channels became less attractive, Vinh said.

"The property market somewhat has been overheating, particularly around Ha Noi, and if this trend continues many risk-averse investors could switch to the stock market," Vinh added.

HCM City-based investment expert Dinh The Hien suggested the stock market would become an increasinlgy attractive investment channel, particularly for speculative investors, since there were often 3-4 uptrend cycles every month lasting 3-4 days each.

"If the lending rate falls below 16 per cent, market liquidity will soar," Hien predicted. — VNS