Brokerages' outstanding loans down 14 per cent
Brokerages' outstanding loans down 14 per cent
Total margin lending balance was approximately VND50 trillion (US$2.11 billion) in the first three months of this year, down 14 per cent from the previous, as worries about the global COVID-19 pandemic slowed trading.The spread of COVID-19 has severely impacted all global stock markets, with Viet Nam’s benchmark VN-Index on the Ho Chi Minh Stock Exchange losing a third of its value in January-March to end March 31 at a three-year low of 660 points.
The tumble left investors unwilling to borrow from securities firms. In addition, shares fell sharply and brokerage houses had to impose forced selling on investors’ portfolios to cut losses.
These were the major factors causing the fall of margin lending in most brokerage houses, data from securities firms’ Q1 financial reports showed.
VPS Securities had the biggest decline in margin lending balance, slipping 40 per cent in three months to VND1.42 trillion. SSI Securities, HCM City Securities, VNDirect Securities and Sai Gon-Ha Noi Securities (SHS) saw their margin lending balance drop between 21.7 per cent and 27.5 per cent.
Foreign-owned securities firms such as Mirae Asset, KB Securities Vietnam and Maybank Kim Eng Securities had the smallest reduction rates in margin lending. Their balances fell between 2.4 per cent and 5.9 per cent.
In the first quarter, Mirae Asset still had the highest margin lending balance at VND6.84 trillion. The South Korean-invested brokerage was followed by SSI Securities and HCM City Securities, whose margin balances reached VND4 trillion and VND3.5 trillion, respectively.
Securities firms have cut lending rates for investors to keep them involved in the stock market. Mirae Asset provides margin lending rates of 9.5-9.9 per cent per annum for new clients from January 1 to June 30.
Top domestic brokerage SSI Securities also offers a VND2 trillion margin lending package at the rate of 9 per cent per annum for new loans. Yuanta Securities Vietnam in April-July offers an 8.8 per cent lending rate for all new loans.
The cut of margin lending rates has proved effective to boost domestic purchases. The VN-Index soared nearly 20 per cent in three weeks to nearly 795 points on April 20 before falling again as the earnings-season effect faded.
