Ho Chi Minh City shares gained Tuesday as investors took heart
from the central bank’s cut in the key interest rate.

The VN-Index of 163 leading firms and four closed-end funds
reached 361.44 points, recording a gain of 3.67 percent from Monday’s closing
value.



The trading volume continued to rise, with 19.5 million shares
changing hands compared with Monday’s 17.8 million. The trading day saw 147
stocks advance and just 12 decline.



Ngo Tuan, deputy director of the Hanoi-based Kim Long Securities
Corp., said sentiment is upbeat following the State Bank of Vietnam’s decision
to reduce, among others, the benchmark interest rate by 1 percent to 12 percent
per year.



The reduction, which takes effect today, will enable commercial
banks to lower their lending interest rates.



“The interest rate cut definitely had a role in today's advance
on the stock markets, but it is just one of many factors, including recent
upbeat signs in the global markets and the government's swift action against the
financial crisis,” Bloomberg quoted Tuan as saying.



“After four days of gains, investor sentiment is more stable, and
the State Bank of Vietnam's move to cut the rate gave an additional boost to the
market.”



Japan’s Nikkei ended the day up 6.3 percent after a holiday on
Monday, having rallied nearly 30 percent from a 26-year intraday low it hit a
week ago. South Korea's KOSPI rose 2.2 percent, up for a second day after the
government unveiled an additional US$11 billion in tax cuts and other measures
to boost the economy.



“The global financial crisis is certainly still a concern,” Tuan
said. “But I don't think the Vietnamese stock markets will drop any lower since
stock prices are already very cheap.”



Tuan added the market trend could only be identified early next
year when there are enough figures about the economy and listed companies’
reports for 2008.



“From now through the end of the year, a number of new companies
will be listed in a wide range of businesses from finance and real estate to
pharmaceuticals and manufacturing,” Bloomberg quoted Le Ba Hoang Quang, the
Hanoi-based head of research at Sacombank Securities Inc. “While this is a good
addition to the variety of stocks, it will create pressure on supply in a bear
market,” he said.



Quang also expects the market to slightly recover and end the
year at 450



F as it has fallen to an attractive level for long-term
investment. A HCMC-based broker said when ex-dividend dates approach, value
investors will be looking for stocks costing less than VND20,000 and price to
earning (P\E) ratios of 5-6.



“Power stocks like Na Loi Hydropower Joint Stock Co. (NLC), Ry
Ninh II Hydroelectric Joint Stocks Co. (RHC), Can Don Hydropower Joint Stocks
Co. (SJD) and Thac Ba Hydropower Joint-Stock Co. (TBC) are very attractive as
they will pay cash dividends of 12-20 percent,” he said.



The stocks’ prices remain low, ranging between VND13,000 and
VND18,000, with their P/E at 2.8-6.8.