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Securities firms reduce margin rates

Update: December, 07/2012 - 10:07

HA NOI (VNS)— A number of securities companies have reduced the interest rates they charge on margin trading in a bid to draw capital back to the stock market.

Interest rates for money lent to purchase shares at most brokerages have fallen to 16-17 per cent per year. They were 20 per cent just a few months ago.

The deposit interest rate has dropped to 9 per cent per year from last June, but because most companies had earlier borrowed capital at high costs they can now afford a further cut on margin interest rates, according to market observers.

During the first half of this year, when the State Bank of Viet Nam reduced the deposit interest rate cap from 11 per cent to 9 per cent per year, most securities companies cut down margin interest rates from 21-22 per cent to 19-20 per cent.

Bao Viet Securities Company and MB Securities Co, and the securities arms of Bao Viet Bank and Military Bank, offered new margin interest rates of 15.5-16 per cent per year, which came into effect last month.

Vietinbank Securities Co and BIDV Securities Co, also backed by capital from Vietinbank and the Bank for Investment Development of Viet Nam (BIDV), have reduced their interest rates on margin loans to 17 per cent per year, or 0.0472 per cent per day.

Notably, Mirae Asset Securities Co offered a "shocking" interest rate of just 9.99 per cent per year, applied to the first 500 customers who have registered to borrow money to invest from this Monday.

However, margin interest rates at some brokerage houses who do not receive financial support from banks remain at 18 per cent per year, such as FPT Securities, Viet Capital Securities, VNDirect Securities. Sai Gon Securities Inc still charge a particularly high rate of 19.8 per cent per annum.

According to most analysts, a key issue is that many speculative shares such as VNDirect Securities (VND), Bao Viet Securities (BVS), Kim Long Securities (KLS), PetroVietnam Construction (PVX) or real estate company Sacomreal (SCR) are not allowed for margin trading (due to the risk of incurring losses), which has failed to attract investors back to the stock market. — VNS

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