Over the past weekend, margin trading figures were the focus of investors’ attention. According to Fiintrade’s statistics, outstanding margin loans at 48 out of 85 brokerage companies reached nearly VND 191.3 trillion, which is a 60.8% increase year-on-year and a 10% increase versus the end of 2023. Leading brokerage companies have released their financial reports for Q1/2024, so it’s likely that the overall market margin has surpassed the 2022 peak, reaching its highest level yet.
Investors’ concerns were apparent because the market dropped significantly this past week, losing almost 8% over the course of the week. Therefore, some investors believe that the market will likely undergo another round of “cross-margin liquidation” after falling below the 1,200 point mark.
According to Mr. Truong Hien Phuong, Senior Director of KIS Vietnam Securities Corporation, if the VN-Index bears more downward momentum, margin pressure will increase.
“However, I’m not too concerned. Over the past two years, brokerage companies have significantly increased their capital. Furthermore, brokerage companies with parent banks have large lending room,” Mr. Phuong added.
Mr. Truong Hien Phuong (left) and Mr. Nguyen The Minh.
Assessing the market’s selling pressure, Mr. Nguyen The Minh, Director of Retail Analysis at Yuanta Securities Vietnam, stated that an optimal period for selling (late March, early April) has passed. Further, investors should not panic given that outstanding margin debt is returning to peak levels because the capital size of brokerage companies and market liquidity have improved drastically.
Mr. Minh also said, “When everyone knows about the bad news, it’s no longer as bad. The most worrying risk is an economic recovery, but it hasn’t happened yet. In an uptrend, it’s normal for markets to exhibit discounted periods.”
Overall, experts are in agreement that the market has reached an attractive zone for investors. Many stocks, particularly in the Securities and Banking sectors, are trading at attractive discounts.
For cash-rich investors, allocating 20-30% of their funds to exploratory investments may be worthwhile. Of course, investors shouldn’t use margin because irregular fluctuations could occur during the bottoming process.
Additionally, the HOSE officially announced for the first time its migration schedule for the KRX system, which should be completed on 02/05/2024.
This is information that investors had highly anticipated. New products such as selling of unsettled securities and day trading will not be launched yet, but changes will be introduced regarding trade placement formats, trade durations, and order matching methods…
However, in addition to opening the market to foreign institutional investors so that they can purchase securities without being subject to the 100% cash deposit requirement, the possibility of resolving the market upgrade obstacles in time for the latter half of 2024 is looking brighter.
