Securities companies engage in fierce competition, offering low-Interest margin lending to Investors
Securities companies engage in fierce competition, offering low-Interest margin lending to Investors
Securities companies are engaged in a fierce competition to offer low-interest margin loans to investors. Compared to the previous year, the current margin interest rates have significantly dropped, ranging from 6 per cent to 8 per cent per year, almost half of what they were before.
By the end of 2023, outstanding margin loans at securities companies reached approximately VNĐ180 trillion, a VNĐ15 trillion increase compared to the end of the third quarter of 2023. — VNA/VNS Photo |
For instance, DNSE Securities Company has introduced the Rocket X programme, offering a margin loan with an interest rate starting from 5.99 per cent for a duration of six months. The programme includes a 10-day interest-free period, after which the interest rate becomes approximately 15 per cent per year.
Yuanta Vietnam Securities Company has launched a promotion where investors who open margin accounts between February 19th and March 19th can enjoy a zero per cent interest rate. This zero-interest rate applies to the first VNĐ100 million (US$4,055) of outstanding debt. Yuanta Vietnam also provides various other margin packages with interest rates ranging from 8 per cent to 9 per cent per year, depending on the borrowing amount and decreasing interest rates.
Mirae Asset Vietnam Securities Company (MAS) has introduced a promotional margin programme for new account holders until March 31st. The programme offers a discounted interest rate of 7.99 per cent per year on margin loans, with a maximum debt limit of VNĐ500 million per account.
Leading securities companies, including SSI Securities Corporation, are actively participating in this race by offering enticing promotions. SSI Securities Corporation provides a refund of up to VNĐ50 million in margin interest to investors. They also offer a margin interest rate of 9 per cent per year for customers with large outstanding debts and follow a T+7 margin policy, which means the first seven days are interest-free. By utilising margin for approximately 25 days, investors can significantly reduce their interest expenses compared to the rates of 13.5 per cent to 15 per cent per year offered by other companies.
Furthermore, many securities companies are adopting "zero fee" policies, where they charge no fees, to attract investors to open accounts and leverage their financial resources.
Industry experts believe that the competition to lower margin interest rates among securities companies aims to attract more investors and increase trading volume, thereby gaining a larger market share. The increased demand for margin loans is driven by improved market liquidity and securities companies' increased capital, allowing for more margin lending. With ample bank funding and low interest rates, banks are readily providing capital to securities companies.
However, experts caution investors against fully utilising margin and advise them not to use maximum leverage to purchase stocks in any situation. Excessive financial leverage carries the risk of margin calls or forced selling of stocks if the market experiences a sharp decline.
The VN-Index is expected to continue its upward trend as it enters the season of shareholder meetings for listed companies, with prospects of business recovery. Investors can take advantage of margin to potentially achieve higher returns. Nevertheless, it is crucial for investors to exercise control over their margin usage, avoid chasing stocks with recent significant price increases, and refrain from using margin to purchase overheated stocks.
According to HCM Stock Exchange's statistics, until the end of the fourth quarter of 2023, the top 10 brokerage firms with the largest market share are VPS Securities Joint Stock Company (VPS), SSI Securities Corporation (SSI), Techcombank Securities Joint Stock Company (TCBS), VNDirect Securities Corporation (VNDS), HCM Securities Corporation (HSC), MB Securities Joint Stock Company (MBS), MAS, Vietcap Securities Joint Stock Company (Vietcap), FPT Securities Joint Stock Company (FPTS), and KIS Vietnam Securities Company (KIS).
Apart from the competition to increase market share, the expansion of margin lending plays a significant role in the revenue of securities companies. By the end of 2023, outstanding margin loans at securities companies reached approximately VNĐ180 trillion, a VNĐ15 trillion increase compared to the end of the third quarter of 2023. This marks the highest level of outstanding margin loans in six quarters since the second quarter of 2022.
