Both markets started last week with moderate gains after a drop in the previous week, despite information that the Government approved the raising of foreign ownership limits in listed companies. However, the rally was mainly driven by blue chips and financial stocks that are expected to benefit from the regulation, but did not extend to many other stocks.

Rumors of the possible lift in foreign room in domestic banks helped the market easily surpass the psychological 600 point benchmark on Thursday, with bank shares leading the upturn. Large-cap lenders, such as Vietcombank (VCB) and BIDV (BID) hit the ceiling, while other banks and insurance companies also rose sharply, led by Bao Viet Holdings (BVH).

These stocks contributed to the market's momentum on Friday, lifting the VN-Index to cross the 615 point threshold, but again this drive could not result in a spillover effect across the market, when many other blue chips, such as Vinamilk (VNM), PV Gas (GAS), Masan Group (MSN), PetroVietnam Drilling and Wells Service (PVD) and Kinh Do Corp (KDC), fluctuated in a narrow range.

Ending Friday, the VN-Index on the HCM Stock Exchange gained a cumulative 5.96 per cent over the week, closing at 616.43 points, while the Ha Noi Stock Exchange's HNX-Index also added 2.55 per cent during the week to end at 87.70 points.

According to data by the financial information website , shares under the VS-Large Cap group saw the most substantial rise of over 7 per cent, but the VN-Mid Cap group rose just 0.99 per cent. Meanwhile, small-cap and penny stocks fell slightly.

Liquidity was little changed compared with the previous week. The daily trading volume in the HCM City's market increased just 4 per cent to reach 142.5 million shares, valued at VND2.39 trillion (US$109.6 million) per day.

Similar figures were reported on the Ha Noi bourse, at 50 million shares worth VND620 billion ($28.4 million) per session, down slightly from the previous week.

Also, last week's opening of the State Securities Commission investment promotion conference in the United States helped bolster domestic investors' psychology. Leaders of the Ministry of Finance and the commission presented new policies to help upgrade the Vietnamese investment environment, including newly-issued Decree 60 which allows foreigners to raise their stakes in Vietnamese listed companies.

Meanwhile, Minister of Finance Dinh Tien Dung said the ministry would soon issue a circular to provide instruction to implement Decree 60 in July. This eased investor concerns about the delay in the implementation of the raising foreign room regulation.

The foreign sector reacted positively to this movement, causing an increase. They picked up the combined net buy values of more than VND1.1 trillion ($50.5 million) worth of shares in the two markets, of which 90 per cent of their purchases focused on the HCM City market's shares.

"Although the market outlook remains in an uptrend in the medium- and long-term period, the markets remain exposed to substantial risks of a short adjustment this week," analysts at Bao Viet Securities Co wrote in a report. They added that the market rallies would heavily depend on leading stocks and foreign movements in the context that domestic money flows were still modest.

According to Viet Dragon Securities Co. analysts, if banks and large caps continue to rise, the market could reach still higher benchmarks. However, they predict cash flows would likely shift to mid-cap and penny shares this week. — VNS