When the stock market has seen a rally in recent times, bringing the Vn-Index to 490 points during the trading session on December 13, many investors begun to mortgage securities to borrow loans for more securities investment.
According to Vietcombank Securities Company, in the last few days, the number of securities-backed loans increased 30 percent over the previous days. Currently, the interest rate for these loans at Vietcombank Securities Company is relatively low at 15 percent per annum, with a securities-mortgaged loan limit at 40 percent of the market price of the mortaged shares. “Many investors have started to borrow shares-mortaged loans as many as possible for a few days,” the broker said.
Meanwhile, investors also increased borrowing at Alpha Securities, with interest rates at over 20 percent per year and loans for only a number of shares, but investors still bravely started out on loans to invest in securities at this time.
In some other securities firms, offering loan interest rates often higher than interest rates for consumer loans at banks, but most securities companies have said the number of some investors who mortgaged shares to borrow loans have begun to increase, although not as many as the previous indexes increases.
Pham Duy Hung, director of the brokerage department said that the Apec Securities Company, in recent times, investors began to boldly use the leverages of financial and mortgage lending. With interest rates applicable at about 20-21 percent, the lending limit at about 50 percent of market share price, the amount of Apec’s loans increased by about 20 percent compared to mid November. However, Hung also said that capital flows into the stock markets, in addition to the financial leverages, idle money of investors has also contributed to market liquidity.
Nguyen Mien Tuan, general director of Vietnam Dragon Securities Company, said: “A few days ago, the amount of loans that investors borrowed signalled a positive increase, which helped improve market liquidity”. The interest rate being currently applied in Vietnam Dragon Securities Company is around 19.8 percent.
Explaining for this shift, according to director of a securities company, the main reason is because investors now began to believe in the rise of the market at the end of the year, so they have boosted buying. An increase of 8 percent in three recent sessions showed that the profits earned from the share investment channel have begun to rise against the interest of bank loans. Additionally, this is the right time to buy stocks to receive the dividend because the season of dividend payout is coming, which has made investors mortage securities nd property to put money into the stock market.