The VN-Index extended last week's modest rally by adding 2.79 points yesterday to close at 310.05.


The rise came as the State Bank of Viet Nam announced
that it was lowering the prime interest rate to 8.5 per cent, a cut of
1.5 percentage points.


Shares of property trader Hoang Ann Gia Lai (HAG)
began trading on the HCM City Stock Exchange yesterday, hitting the
ceiling in the regulated trading band to close at VND48,000 (US$2.90)
per share — a remarkably strong performance in light of the anaemic
performance of a number of recent new listings.


The exchange witnessed 99 winners and 45 losers
overall in yesterday's session, while trading volume continued to be
substantial at nearly 15 million shares and a turnover of VND533
billion ($32.3 million).


Activities concentrated on some major stocks, with
Sacombank (STB) generating orders for 1.5 million shares, followed by
PetroVietnam Finance (PVF) with 1.1 million, and Saigon Securities Inc
(SSI) with 777,000.


Foreign investors yesterday were net sellers of about
629,000 shares, with a net sales value of VND6.2 billion ($375,700), a
reversal of last week during which they had been net buyers to the tune
of VND69 billion ($4.2 million).


Ha Noi Securities Co said in a report that, with
relatively steady increases last week and the new rate cut, the market
would likely continue to gain ground this week, although it tempered
the prediction by saying no prolonged upward trend was expected over
the short term.


The company said investors now had a wide range of
choices for long-term investment, but suggested caution in selecting
shares in which to invest.


EuroCapital Securities saw a likelihood that the
market would see positive developments between now and the end of this
month, as the world moved toward a period of 'zero interest rate
policy' and domestic moves had included an economic stimulus package of
up to $6 billion.


Viet Nam International Securities analysts also
expected yesterday's interest rate cut to encourage capital flows into
other investment channels with higher returns, including the stock
market.


The director of the State Bank of Viet Nam's HCM City
branch, Ho Huu Hanh, noted, however, that although deposits at the
city's banks had declined this month following recent interest rate
cuts, insignificant amounts of capital had shifted into stock, real
estate or gold markets.


Hanh said the prime rate was unlikely to be cut
further anytime soon. "Changes coming too fast will make it difficult
for banks to turn around and to attract idle capital," he said.


In Ha Noi yesterday, the HASTC-Index increased a scant
0.12 per cent to end the day at 107.85 points, with a volume of 6.75
million shares and a trading value of VND157.8 billion ($9.6 million).


The northern market saw 100 gainers and 35 losers,
while trading remained modest in most codes. Kim Long Securities (KLS)
led the market with only 898,000 shares traded, followed by Vinaconex
Group (VCG) with 880,500 shares.