Though the market has begun to show signs of recovery, investors have yet to borrow against shares to reinvest in the market, securities companies said.


A tie-up between Kim Eng Vietnam Securities and Eximbank allows people to borrow by pledging shares for up to six months at 0.833 percent interest a month. The loans are capped at 40 percent of the value of the securities and three times their face value.


Other brokerages like Au Viet Securities, Viet Dragon Securities, Ho Chi Minh City Securities Corporation, and Sacombank Securities are also offering loans against shares.


Apart from certain listed shares, liquid stocks on the unofficial over- the-counter market, like Military Bank, Eximbank and Vietcombank, are also accepted as collateral.


But not many investors avail the facility since the current market rally is tenuous, securities companies say.


Johan Nyvene, CEO of the Ho Chi Minh City Securities Corporation, said the number of clients borrowing is modest since there is no confidence in the market.


Nguyen Quoc Hung, General Director of Alpha Securities, said few investors have borrowed in the last one month.


The VN-Index, the country’s main stock index, has rallied 21 percent since April 1. It rose 14.68 points, or 4.36 percent, Tuesday to close at 351.32, up 49 percent from a four-year low on February 24.


Thanh, a SSI client, said he decided not to borrow money against shares to invest in the stock market after learning from huge losses last year.


He had to sell his shares to repay bank loans last year after their value slumped, he said, adding he now invests only with his own funds.


Banks stipulate they have the right to sell the securities pledged with them if their value declines 25-30 percent and borrowers fail to maintain the margin within three days.


Nguyen Mien Tuan, General Director of Viet Dragon Securities, said while not many investors borrow against shares, even those who do borrow for purposes other than buying stocks.