Margin worries extend decline

Thursday, Nov 12, 2015 09:03

Investors watch stock movement during the afternoon session yesterday at Saigon Securities Inc in Ha Noi. — Photo Viet Thanh

HA NOI (Biz Hub) — Shares declined for a fourth session yesterday amid investors' worries about the high level of trading on margin in some securities companies.

The benchmark VN-Index on the HCM Stock Exchange decreased 0.3 per cent to close at 603.5 points. The Index lost a cumulative 2 per cent in the past four sessions.

On the smaller market in Ha Noi, the HNX-Index edged down 0.4 per cent to end at 80.5 points, extending its four-day loss to 1.6 per cent.

According to some reports on local media late last week, loans to investors who trade on margin in some big brokerage companies like Saigon Securities Inc, HCM Securities Corp, VNDirect Securities Co and Sai Gon-Ha Noi Securities Co have almost reached the highest level this year at over VND2 trillion (US$89.3 million) each.

Margin loans on smaller financial companies including Kim Eng Securities, Vietcombank Securities and Viet Capital Securities were less than VND1 trillion ($44.6 million).

"The level of trading on margin is a measure of the market risk," said Hoang Thanh Tung, an analyst at Royal Securities Co.

"Though information of margin loans in some securities is not official, many investors suppose it's true and were worried about the risk of a market fall due to selling pressure from borrowed shares," Tung said.

The overall market condition was negative yesterday with over 33 per cent of 680 trading stocks slumping while 24.5 per cent advanced.

Losers included some of the index's biggest stocks like insurance giant Bao Viet Holdings (BVH), real estate developer VinGroup (VIC), Vietcombank (VCB), Bank for Investment and Development of Viet Nam (BID), PV Gas (GAS), steelmaker Hoa Phat Group (HPG), software producer FPT Corp (FPT). Except Vietcombank and BIDV which declined over 1.2 per cent, the others dropped less than 1 per cent.

On the other end of spectrum, Vinamilk (VNM), the largest domestic dairy producer as well as the biggest stock by market capitalistion, continued to rise.

The price of Vinamilk's shares gained 1.6 per cent to close at VND127,000 ($5.67) each. The stock has climbed 7.6 per cent in the last seven sessions following the news that the company has suggested the Government allow a maximum foreign ownership of 100 per cent of the company.

However, Tung predicted that Vinamilk would soon face correction pressure as its price to earnings ratio (P/E) was currently high, about 20, compared with the average ratio of 13 in HCM City's market.

He said that Vinamilk's price had continued to rise on investors' expectation that it would reach VND160,000 ($7.14) a share, equivalent to the price that Singapore's food and beverage company Fraser and Neave (F&N) offered to buy the 45 per cent stake that the State Capital Investment Corporation (SCIC) is holding in Vinamilk.

Last week, local media reported F&N has proposed to buy SCIC's stakes in Vinamilk in a deal worth $4 billion, but the Singaporean company denied this information.

Liquidity decreased over Tuesday with 132.6 million shares worth VND2.3 trillion ($102.7 million) being traded on the two exchanges, down 19 per cent in volume and 11 per cent in value compared with the previous session. — VNS

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