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Margin lending soars in Q1
Total securities lending at brokerage companies has soared dramatically, raising concern that over-lending could lead to volatility when the market slumps.
Margin lending at the 10 biggest securities companies reached VND10.149 trillion ($481 million) in the first quarter, up 68 per cent over the same period of last year, according to Vietstock.vn.
HCM Securities Co (HCM) was the biggest lender with outstanding loans reaching VND1.884 trillion ($89.3 million). ACB Securities Co followed closely with total loans of VND1.876 trillion ($88.9 million). Saigon Securities Inc (SSI) and MB Securities (MBS) lent around VND1.5 trillion ($71 million) each.
Margin lending increased robustly in the first three months of the year along with strong growth of the stock market. The VN-Index on the HCM Stock Exchange climbed 17 per cent from January to March, while the HNX-Index on the Ha Noi Stock Exchange jumped nearly 32 per cent.
Liquidity also soared on both markets, with the trading volume on the HCM City exchange rising 170 per cent compared to the previous quarter, averaging 132.2 million shares per session. The market volume on the Ha Noi exchange also doubled from the last quarter of 2013, averaging 81.2 million shares a day.
Improved trading also helped raise revenue at securities companies. Total turnover at the top 10 brokerage companies was recorded at VND404 billion ($19.2 million) in the first quarter, an increase of 63 per cent compared to the previous term.
SSI was the top earner with revenue of VND76 billion ($3.6 million). HCM came second with VND69 billion ($3.3 million), followed by VNDirect Securities Co (VND) with VND48 billion ($2.3 million).
However, the stock market has continuously fallen since the beginning of May, when the tension between Viet Nam and China began to escalate.
Analyst Thu Hoa at Vietstock Finance Co predicted margin calls would not last long as the long-term market outlook was optimistic and stock investment was considered the most profitable channel compared with gold, real estate or bank deposits.
In addition, the lending ratio at securities firms was still considered safe, as their total margin loans had yet to exceed 200 per cent of their equity, well in line with State Securities Commission regulations, Hoa said.
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