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Margin interest rates to stay steady
Interest rates on margin trading offered by securities companies are expected to remain stable this year following Circular 36, which took effect early this month.
Margin interest rates at many stock brokerages currently hover around 13-14 per cent per year, a slight decrease from the 14-16 per cent of previous years.
In the context of declining lending rates at commercial banks, it is normal for securities companies to lower their lending charges. However, according to many analysts, margin rates are unlikely to go down given the probable reduction in lending to stock investments from banks after the effect of Circular 36.
This ruling limited how much banks could lend to stock investments to 5 per cent of charter capital and set conditions under which banks could give loans.
In their January report, analysts at Bao Viet Securities Co said this would provide a good chance for brokerage firms with strong financial capacity to raise their market share, as investors would likely leave small brokers who could not meet their demand for margin trading.
Backed by KIS, a leading Korean securities company, KIS Vietnam Securities Corp offers the lowest margin interest rate of 9.9 per cent.
Early this year, the company hiked its charter capital from VND263.6 billion (US$12.3 million) to more than VND1.1 trillion ($52 million).
Only 10 brokerage companies in Viet Nam have charter capital that exceeds VND1 trillion ($46.7 million).
Companies applying lower interest rates on margin lending are often foreign-invested firms or arms of commercial banks like VP Securities with the annual margin interest rate of 11.5 per cent; Vietcombank Securities with 12.6 per cent; and MB Securities and BIDV Securities with 13 per cent.
Trading became more sluggish early this month following the validation of Circular 36. In the first week of February, four brokerage firms announced temporary reductions in margin lending associated with banks: SHB Securities (SHS), MB Securities (MBS), VNDirect Securities (VND) and Maritime Bank Securities (MSBS).
However, other companies in the top 10 like Saigon Securities (SSI), HCM Securities (HCM) and Bao Viet Securities Co (BVS) said their lending remained stable.
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