Encouraged by recent stirrings of activity on the part of local investors, many analysts have tentatively suggested that faith in the stock markets is on the rebound.

Brokers during a trading session at Ha Noi Securities Trading Centre. Market analysts say investors' faith in the stock markets is growing.

According to some medium-sized brokerages in Hanoi, the number of clients coming to securities firms has increased significantly, a comeback signalled by the hundreds of billions of dong collected during each of the last several sessions.

"We cannot give accurate data on income for every single trading day. But we are certain that more and more investors are coming back to the exchange," a representative from the surveyed brokerages said.

Starting June 12, the VN-Index began its initial rebound to 370.55. The index has continued to gain over the last five sessions, closing yesterday at 384.71.

On Monday this week, the State Securities Commission decided to loosen the trading band by one percentage point at both the HCM City and Hanoi bourses, a move that is considered a Government encouragement of traders' faith.

Effective from June 19, investors will bellowed to buy or sell securities within 3 per cent of the reference price in HCM City Stock Exchange, and 4 per cent in Hanoi. The bands are currently 2 and 3 per cent, respectively.

This follows last Tuesday's decision by the State Bank of Vietnam to lift the prime lending rate from 12 to 14 per cent and scale down the value of dong against the US dollar.

The new regulation has eased some of the tension in the monetary market, allowing commercial banks greater room to ensure their liquidity and help stabilise the exchange rate market.

The news by banks and regulators has clearly buoyed investor sentiment.

Nguyen Tien Duc, a broker with VNS Securities, said that investors were eager to trade in the market once again and were buying in high volumes. He added that the buying orders were estimated at three times higher than selling orders.

Nguyen Quynh Huong, an investor at An Binh Securities, said the rebound in the VN-Index over the last five sessions had stoked investor interest in trading once again.

"The stock market seems to be warming up again after falling nearly to the 370 point mark. The advance seems likely to continue, as the VN-Index has already been gaining for five days," Huong said.

She added that investors could soon earn higher profits since wider trading bands allow the prices to go up faster. "That's why we will trade more next time."

More than eight million shares changed hands on the HCM City bourse yesterday, worth a value of VND321.29 billion (US$20.08 million).

Another investor at An Binh Securities said that when the trading band was loosened to 4 per cent in Hanoi, as the regulators slated on Monday, he would be able to earn a steady profit of up to 20 per cent after a week.

"In comparison to the maximum interest rate of 18 per cent per annum from commercial banks, securities investment sounds much better," he said.

Recent gains seem to suggest that Government attempts to stabilise the stock market in particular, and the economy in general, are beginning to show signs of success.

Nguyen Tien Dung, an independent analyst, said "Investors are coming back to the stock market, despite their different aims and objectives, which is a good signal for the Government on the macro scale."

Dung explained that the traders' return was equivalent to a nod of support for Government policies aimed at stabilising the exchange. "It's time the Government's stabilising strategies for the stock market, as well as the overall economy, began to take effect. Investors play a key role in how well these strategies work."

Vietnam's deficit has been falling steadily over the past months, with the country posting a deficit of only $2.6 billion in May, compared to $2.8 billion in April and $3.2 billion in March.

The overall trade deficit in the first five months of 2008 was US$14.4 billion, according to the General Statistic Office.

Prime Minister Nguyen Tan Dung last month announced that despite the trade deficit, Vietnam had posted a $1 billion surplus in the balance of payments in the first five months, and would continue to post a total surplus of $2-3 billion for all of 2008.