HÀ NỘI— The circular that puts a stop to foreign investors’ margin trading from July 1 would not affect capital flow in the local market, said securities experts.
The Article 9, section 4 of the Circular No 203/2015 / TT-BTC that guides the listing on the stock market regulated that foreign investors were not allowed to perform margin trading.
So far, some securities companies have announced that they would stop opening new margin trading accounts for foreign investors and for the ones who already had margin trading accounts, they would lock the purchasing side and keep the selling side so that foreign investors could sell their stocks to pay the debts. They also stopped new disbursement for such accounts.
According to local data, at the end of first quarter, local margin lending in 12 securities companies with the biggest margin in the market reached VNĐ21 trillion (US$954.5 million) , an increase of 61 per cent over last term. The two biggest margin providers distributed one third of the margin in the market. Of the two, Sài Gòn Securities Inc (SSI) provided over VNĐ3.77 trillion, an increase of VNĐ1.5 trillion over the same period last year while HCM City Securities Corporation (HSC) provided VNĐ2.35 trillion, an increase of over VNĐ1.2 trillion from its last term.
While SSI still had no answer about the impact of the margin cut for foreign investors, Bảo Việt Securities Company, which provided VNĐ986 billion of margin to the market said it did not process any foreign margin trading so the regulation would not make any changes to company operation.
A representative of the securities company said the cut would not apply for all foreigners. A foreign investor that has stayed in Việt Nam for more than one year and organisations which have their legal representatives in Việt Nam were still allowed to open their margin accounts in the local market.
He said, normally the foreign investors have to invest under Circular No 5 of the central bank which guided the indirect capital from foreign investors while most of the foreign organisation investors or funds did not have margin trading due to high risk and also higher operating fees.
Thus, the regulation of this circular would mostly do no harm to the current capital flow on the local market, he said.
According to the Việt Nam Securities Depository, by this April, there were total 19,016 foreign securities trading accounts including 2,908 organisation investors and 6,108 individual investors.
In the first four months of this year, about 500 foreign investors were granted trading accounts in the local market, an increase of 140 per cent over the same period in 2015. — VNS