The outstanding balance of margin loans at Vietnamese securities companies has surged to unprecedented levels, surpassing the peak recorded in early 2022 when the VN-Index was at its historic high. By the end of 2024 and into the first quarter of 2025, total margin debt reached approximately VND 240-280 trillion (around $10-11 billion USD), driven by renewed investor optimism and brokerage firms' increased capital to meet demand. While this growth reflects positive market sentiment and robust economic outlooks for 2025, it also highlights the need for continued vigilance regarding market volatility and potential risks associated with high leverage.
Margin Lending Hits New Heights in Vietnam's Stock Market
Vietnam's stock market is experiencing a significant surge in leveraged trading, with the outstanding balance of margin loans at securities companies climbing to new record highs. This surge indicates a strong return of investor confidence and a more active trading environment, pushing total margin lending beyond the levels seen during the VN-Index's peak in early 2022.
According to reports from leading brokers like Saigon Securities Inc. (SSI) and data from financial providers like FiinTrade, the total outstanding margin loans at Vietnamese brokerage houses reached an estimated VND 195 trillion (approximately $7.66 billion USD) by the end of March 2024. This figure already surpassed the previous peak set in early 2022 when the benchmark VN-Index touched a historic high of 1,500 points. Further data indicates that by the end of 2024, the estimated total outstanding loan balance at securities companies had soared to around VND 245 trillion (around $10 billion USD), with margin debt comprising approximately VND 240 trillion of that amount. By the end of Q1 2025, this figure had reached nearly VND 280 trillion (nearly $11 billion USD).
Drivers of the Margin Lending Boom
Several factors are contributing to this significant increase in margin lending:
Renewed Investor Confidence: Following periods of market volatility and decline in 2022 and early 2023, investor sentiment has largely recovered. A more positive outlook on Vietnam's economic growth in 2025 (with forecasts around 6.5-7.5% GDP growth) and an improved business environment are encouraging more participation in the stock market.
Securities Companies' Increased Capacity: To meet the growing demand for leverage, many securities firms have actively increased their charter capital over the past year. This includes major players like Techcombank Securities (TCBS), SSI, VPS Securities, Vietcap Securities, and HSC. This capital injection directly expands their capacity for margin lending, as Vietnamese regulations limit margin loans to a maximum of 200% of a company's equity.
Attractive Interest Rates: In the interbank market, overnight lending interest rates have been at record lows (around 0.15-0.2% per annum), allowing securities companies to access capital at favorable costs, which they can then lend to investors for margin trading.
Competition Among Brokers: The demand for margin loans has intensified competition among securities companies, leading some to reduce lending interest rates and transaction fees to attract and retain customers. Margin lending and proprietary trading remain key contributors to revenue for brokerage firms.
Market Recovery and Growth Potential: Despite the VN-Index not yet returning to its 2022 peak, the market has seen a significant recovery. Analysts and investors are optimistic about the market's prospects in 2025, driven by factors like infrastructure investment, FDI attraction, and a recovery in consumption, which fuels demand for leveraged positions.
Risks and Outlook
While the surge in margin lending reflects a buoyant market, it also comes with inherent risks:
Market Volatility: High leverage magnifies both gains and losses. In periods of sharp market corrections, such as the one seen in early April 2025 (where the VN-Index dropped over 220 points), excessive margin lending can lead to widespread margin calls and forced liquidations, exacerbating sell-offs.
Concentration Risk: While overall asset risk is generally well-managed through collateral, some reports indicate that margin lending risks are concentrated among a few large clients for certain firms.
Liquidity Concerns: Interestingly, despite the record high outstanding loans, market liquidity has sometimes appeared sluggish, with individual investors reducing net buying and foreign investors engaging in net selling at certain points in late 2024. This raises questions about how the borrowed capital is entirely being utilized.
Despite these risks, industry experts note that the margin loan-to-equity ratio, while high (around 83% for some major firms), remains well within the regulatory limit of 200%. This suggests that theoretically, securities companies still have significant headroom for additional lending (estimated at around VND 277-297 trillion).
The sustained growth in margin lending underscores the increasing sophistication and vibrancy of Vietnam's stock market. As the country continues its economic development, the challenge for regulators and market participants will be to balance leveraging opportunities for growth with robust risk management frameworks to ensure the market's long-term stability and sustainable development.