VietNamNet Bridge – The finished the first trading week of the new year in the black.

Although just three sessions in after the holidays, liquidity saw an increase of around 10 per cent in HCM City and 40 per cent in Ha Noi over the previous week.

Trading value averaged VND1.5 trillion (US$71.4 million) while volume averaged nearly 117.5 million shares on the HCM City Stock Exchange. The benchmark VN-Index gained 7.38 per cent over the previous Friday's close, standing at 426.06 points.

On the Ha Noi Stock Exchange, the HNX-Index rose 9.55 per cent to reach 59.21 points. Market value fetched VND965.3 billion ($45.9 million) on a volume of around 139.2 million shares per session.

Last Thursday, a correction occurred with investors wary of an unexpected sharp increase that fueled a sell off.

However, there was still a blessing in disguise when new cash flows were used to drive share prices to higher ground.

In addition, the strong return of foreign investors also helped domestic investors keep confidence in market growth potential. Foreign investors were buyers on both bourses, picking a combined margin worth VND325.2 billion ($15.4 million). "After the six-month tumble from May, the market is likely to enter a new growth period," said Sai Gon-Ha Noi Fund analyst Nguyen Duc Viet.

"I estimate the market will grow by 15 to 20 per cent this year," he added.

In the past, the market was driven by speculative stocks with high margins. However, as the mindset of economic growth has changed, real estate shares which led the recovery in 2009 may no longer be on top in the future.

Economic data also contributed to this week's rally.

In 2013, foreign direct investment registration is expected to reach $14 billion compared to the estimated $13 billion last year.

Governor of the State Bank of Viet Nam Nguyen Van Binh said that drastic measures would be taken to restructure the banking system, including extending stakes for foreign investors in weak banks from the previous cap of 20 per cent to 30 per cent.

Interest rates could also be further cut this year, according to the National Financial Supervisory Commission. The commission added that the aggregate demand of the economy remained weak, so the risk of higher inflation was unlikely.

This year, the central bank would continue to control credit limits and monetary supplies. "Falling interest rates should not have a major affect on inflation," said PetroVietnam Securities Co analyst Dao Hong Duong.

In addition, gas prices, a vital commodity in terms of CPI, have fallen since January 1.

"These are the elements needed for a strong recovery in the short term," commented analysts from financial information website

Source: VNS