Due to the recent rapid growth of the stock market, the State Securities Commission of Vietnam (SSC) has taken steps to control the flow of loans into the stock market.
SSC’s draft policy sent to securities companies stated that SSC plans to raise the ratio of initial margin to the minimum 60 per cent.
If the draft policy gets agreement from securities companies, it will be effective from February 01, 2018.
According to the current margin trading regulations, the initial margin ratio shall be set by the securities company but not lower than 50 per cent.
According to SSC’s draft policy, this proposal is based on the recent strong growth of the stock market in terms of index and transaction scale.
For margin lending, according to preliminary statistics as of September 2017, about 20 large securities companies in the market offered investors loans of more than VND32 trillion (US$1.4 billion), up 35 per cent compared to 2016.
Sai Gon Securities Incorporation (SSI), which has the largest brokerage market share, is also the biggest lender with loans about VND4.8 trillion (US$211.6 million). Ho Chi Minh City Securities Corporation (HSC) and Viet Capital Securities (VCSC) rank the second and third with loans of VND3,541 billion (US$156 million) and VND3.2 trillion (US$141 million), respectively.
Thanks to good liquidity on the stock market in quarter IV of 2017, these securities companies’ lending scale certainly increased. Specific figures will be released in the year-end financial statements this month.
In order to meet the increasing demand for loans from investors, besides the bank loans, securities companies have recently issued more bonds to replenish their loans and replace bank loans to increase stability since bonds have longer terms.
In 2017, VCSC three times issued bonds worth VND1 trillion (US$44.1 million). HSC recently announced the successful issuance of bonds valued at VND800 billion (US$35.2 million) to expand its lending scale. After issuing bonds worth VND600 billion (US$26.4 million) in 2017, SSI plans to issue convertible bonds valued at VND1.2 trillion (US$52.9 million) to increase its working capital.
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