The real level of lending to securities

27-Oct-2018 Intellasia | VnEconomy | 6:00 AM Print This Post

Total margin lending in securities companies is currently at a low level, about 22 trillion dong.

The stock market reacted cautiously in the 23rd and 24th of October on credit rumours that credit for margin lending will be tighter further in 2019. At the moment, margin lending at securities companies is currently at a low level of about 22 trillion dong.

At the opening session of the sixth session on 22nd October, prime minister Nguyen Xuan Phuc presented the plan for socio-economic development in 2019, of which credit growth was below 17 percent with tightened credit used for securities and real estate.

Talking with VnEconomy, a head of the State Securities Commission said that the tight control message that the prime minister raised did not means to tighter credit for two sectors of securities and real estate. This should be understood to closely monitor the lending procedures in these two areas to achieve the set goals, ensuring safety of the system since the government has always identified real estate and securities as two important areas of the economy. In particular, the stock market is an important channel for capital mobilisation for the economy.

In fact, credit for securities is mainly done through two channels: banks sponsor securities companies for margin lending, and banks directly sponsor investors.

According to statistics from the State Securities Commission, credit for securities is at a very low level. For bank channel, financing for securities companies for margin lending is currently at about 21-22 trillion dong.

Direct banking channel of lending to individuals to invest in securities, according to statistics is about more than one trillion dong. “Both numbers are too small since the total credit via the two channels is only about 0.3 percent of total outstanding loans of the commercial banking system,” the Securities and Exchange Commission commented.

However, it is also said that with the current situation when consumer lending is booming, there is a risk to the system. It is very likely that money is borrowing to buy houses and land, but while waiting for the disbursement is used to “surf” on the stock market. This, according to the Securities and Exchange Commission, is likely to happen but not much. The problem is to strictly control lending procedures to avoid misuse of funds.

Regarding this topic, a senior official in charge of this area of SBV confirmed to VnEconomy that up to this moment, outstanding credit for real estate and securities in the system still accounted for low proportion, below 10 percent each; real estate credit alone, if the adding consumer credit for home purchase and repair housing, is also just over 10 percent.

In another remarkable move, according to updated data from the State Securities Commission, the total net capital inflows of foreign investors as of 16th October reached $2.97 billion, surpassing the net figure for the whole year of 2017 (at $2.92 billion) and also up from $2.89 billion updated on 9th October.

Compared with the recent capital inflows from emerging markets, the net increase of $ 2.97 billion for Vietnam market in the past nine and a half month was considered positive change.

As of 16th October 2018, the value of foreign portfolio reached $35 billion, down $2.3 billion compared with the end of September, which was mainly due to recent price drops. But compared to $32.8 billion at the end of 2017, the value of the foreign portfolio at the moment has increased.

Particularly, the cash balance on foreign investors’ accounts was still high at around one billion US dollar (around 23.6 trillion dong), ready to be disbursed.

Previously, the data updated on 9th October showed that the cash balance on the account of foreign investors was high at 25.2 trillion dong, and the value of the portfolio of foreign investors is estimated at $36.3 billion, an increase of $0.6 billion compared with $35.7 billion at 26th June, when the market had strong fluctuations.


Category: Finance, Vietnam

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