The value of margin lending at securities companies is increasing in the context that the liquidity in the market has shown positive signs.

Liquidity in the last few sessions of May and the beginning of June almost reached the milestone of VND20 trillion a session.

For example, in the trading session on June 8, the proprietary trading sector of securities companies net bought a value of VND438 billion shares, the highest level since the end of December 2022. Previously, this group net bought more than VND788 billion in May only and disbursed a total of VND2.5 trillion in the first 5 months of 2023.

Large cash flow into the market also comes from a group of domestic individual investors. In a recent report, PYN Elite Fund - an investment fund from Finland - said that individual customers started transferring money from banks to the stock market.

According to statistics on more than 70 securities companies, total margin loans at securities companies increased by 2.4 per cent in the first quarter of 2023. However, compared to last year - when the VN-Index conquered the 1,500 point mark and entered the period of deep adjustment, the margin loan balance decreased by approximately 19 per cent.

There are many factors that positively affect liquidity in the stock market in the second half of 2023. Nearly 105,000 new accounts were opened in May, the highest in the last 9 months.

External factors also supported liquidity such as cooling interest rates, and policies to remove difficulties for the corporate bond market and the real estate market.

After the State Bank of Viet Nam lowered the operating interest rate three times, the deposit interest rate has now decreased by 2.5-3 percentage points compared to the beginning of the year.

Reactivate margin capital flow

Despite the contraction in the total trading value of shares, in the past year, there were still a number of securities companies that successfully expanded the value of margin loans.

VPBank Securities (VPBankS) topped the list when lending a margin value of VND3.1 trillion in 2022. After the M&A deal completed at the end of May 2022, this securities company was officially owned by VPBank (99.95 per cent). This new shareholder with abundant financial resources has helped VPBankS' charter capital increase from less than VND270 billion to VND8.92 trillion in April 2022 and VND15 trillion in December 2022. 

Many other new names also recorded a significant increase in margin balance during this period such as DNSE Securities JSC with VND1.1 trillion, DSC Securities with VND723 billion, and Kafi Securities with VND576 billion.

According to its plan, VPBankS will spend most of its resources on margin lending. DSC will offer existing shareholders to double its charter capital. DNSE was approved by shareholders to raise capital through an initial public offering (IPO) of 30.6 million shares.

Many programmes to attract new customers and incentives when using margin lending services are being implemented by securities companies. More opportunities can create a "trigger" to push margin capital back to participate in the market. — VNS