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Demand for securities loans up with stock market thriving
Applications submitted for loans and outstanding loans for securities investors have increased by two- to three-fold as commercial banks have opened doors wide again to borrowers.
Banks loosening purse strings
Au Viet Securities Company said that it has cooperated with the Bank for Agriculture and Rural Development (Agribank) and Bank of Investment and Development of Vietnam (BIDV) to resume loaning to securities investors with collateral being the securities items the clients plan to buy.
Clients can borrow up to 40% of the securities’ market prices at the interest rate of 10-10.5% per annum. An individual can borrow up to VND3bil at maximum, while a legal entity up to VND5bil for six months.
The securities items which will be accepted as collateral are securities listed on either bourse. OTC share items may also be accepted depending on the case, though borrowers would have to bear higher interest rates for OTC share investment deals than for listed share investments.
Kim Eng Vietnam has also been providing loans with the cooperation of Eximbank. The lending interest rate is 0.833% a month, and borrowers can borrow up to 40% of the securities’ market values for six months. Kim Eng Vietnam is accepting 58 share items now being listed at the HCM City Stock Exchange and 31 share items on the Hanoi bourse. Meanwhile, 12 OTC share items are also being accepted, mostly bank shares, including Vietcombank, Techcombank, East Asia Bank and Military Bank.
Most securities companies have resumed providing the service with the cooperation of at least one commercial bank. Nguyen Hoang Long, acting Director of Au Viet Securities Company, said that since March, when the stock market became bustling again, more and more investors have had a demand for loans and banks have loosened loan conditions.
Being cautious about loans
Securities companies say that investors get loans mostly to serve short-term investment deals. Huynh Anh Tuan, General Director of SJC Securities Company, said that the number of investors on the company’s trading floor has increased by two-fold over recent months. However, SJC reminds investors to be cautious with investments, especially as the market is surging too rapidly.
“We have been strictly following the requirements set by banks to minimise risks for both us and banks,” Tuan said, adding that the stock market’s performance was following investors’ actions and the performance of the US stock market.
According to Nguyen Hoang Long, many investors believe that the worst time of the market is over; therefore, they are purchasing stocks. Some investors say that the average interest rate applied by commercial banks is 10-10.5% per annum, which means that they have to pay 2% only if they borrow for two months, which proves to be reasonable if compared with the current profitability.
An investor on ACB Securities’ trading floor said that the stock market has become attractive as it is difficult to ‘play’ with the gold market, while the real estate market remains quiet.
VietNamNet, DTCK
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