With the stock market still relatively sluggish, many securities companies have continuously launched margin lending packages with preferential interest rates to encourage investors to trade and boost the market’s liquidity.
Low Demand for Borrowing
VPS Securities Company has just launched a new margin lending program with an interest rate of only 4.5%/year for the first five days and 8%/year for the first seven days. Yuanta Vietnam Securities Company is offering margin loans at just 6.8%/year for the first billion VND of debt. VPBank Securities Company provides stock purchase loans with an interest rate of 8.6%/year, with a limit of up to VND 5 billion/account. SHS Securities Company offers package T5 with 0% interest for the first five days and 15%/year for the remaining debt from the sixth day; package T7 with an interest rate of 6%/year for the first seven days and 14.5%/year from the eighth day onwards…
Mr. Ho Sy Hoa, Director of Research and Investment Advisory at DNSE Securities Company, said that the company is also applying many margin loan packages such as Rocket X, Rocket Interest-free, and Flash Margin… with interest rates as low as 5.99% or 9.99%. The product packages are very diverse, suitable for the “risk appetite” of the vast majority of investors in the market.
“With the three-day Rocket Interest-free package, investors are also exempt from transaction fees. With the Flash Margin package, DNSE is ready to increase the loan ratio up to 50% for liquid, profitable codes, suitable for short-term investment,” said Mr. Ho Sy Hoa.
In reality, despite securities companies launching promotional packages for wave trading, the demand for borrowing from investors is not high at this time. Mr. Nhat Khang, an investor in Ho Chi Minh City, commented, “The market is very difficult to surf right now. I’m still holding onto stocks that I bought a few months ago at a loss, so I’m not interested in borrowing more, and many others feel the same.”
Creating Additional Revenue for Securities Companies
According to Mr. Nguyen The Minh, Director of Analysis, Personal Customer Division of Yuanta Vietnam Securities Company, revenue from transaction fees of securities companies is decreasing in the context of the race to waive transaction fees, and the profit margin in this segment is very low. Revenue from proprietary trading is also limited and conflicts with the interests of customers.
Therefore, many securities companies have to promote margin lending to create additional revenue. “Many securities companies have aggressively increased capital in recent years, leading to excess cash, so they have to push margin lending,” Mr. The Minh explained.
Many investors are now very cautious when deciding to borrow margin to buy and sell stocks in the short term. Photo: HOANG TRIEU
Mr. Ho Sy Hoa admitted that promoting margin lending in the last months of the year aims to increase market share and boost business results for the whole year of 2024. The competition among securities companies in margin lending interest rates will give investors more opportunities to access cheap capital at good times to increase their investment ratio. On the other hand, this can promote trading turnover, thereby increasing market liquidity.
Personal finance expert Le Xuan Huy believes that after the race to reduce transaction fees, revenue from margin lending interest rates has become essential for securities companies. Moreover, many securities companies with 100% foreign capital have low capital usage costs, and domestic interest rates have also decreased, creating favorable conditions for the race to reduce margin lending rates.
“When the stock market has a short-term upward trend, margin money will help increase liquidity and push the market up faster. However, investors should only use margin to buy and sell stocks in the short term when the market is rising and should not borrow at too high a ratio to limit risks when the market adjusts,” said expert Le Xuan Huy.
Securities companies advise using margin only for groups of liquid stocks with attractive valuations and a specific investment story.
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