Vietnam’s Margin Debt Hits Record High as Fund Manager Warns of Default Risk

SGI Capital warned that some shareholders in Vietnam’s stock market have continued to increase their margin borrowing and move the funds out of the market for other purposes. Citing FiinTrade data, the firm said marketwide margin debt stood at about 457.5 trillion dong at the end of the third quarter, equivalent to more than 5.3% of total stock market capitalization and 14.2% of free-float shares. Both ratios were record highs. Investors using leverage face about 13 trillion dong in interest payments each quarter.

Compared with the first quarter of 2022, margin debt has risen to about 2.5 times its former level, both in absolute terms and relative to free-float shares. Investors’ cash balances at securities companies fell 15% to 71.5 trillion dong. SGI Capital estimated that, assuming securities companies lend an average of 40% of a stock’s market value, shareholders have pledged about one-third of the free-float shares on the Ho Chi Minh City and Hanoi stock exchanges as collateral for margin loans.

Investors monitor the stock market at a securities company in Ho Chi Minh City.（VietVance）

SGI Capital is concerned that some borrowed funds have left the stock market. If the funds fail to generate the expected cash flow or return in time, borrowers may be unable to repay their debts when due, forcing securities companies to sell the shares pledged as collateral. The firm said some stocks have hit their daily price floors for several consecutive sessions in recent months, with pending sell orders equivalent to 15% to 50% of the companies’ market capitalization. If forced sales drive prices down further, the value of collateral in other accounts could also be affected.

Market liquidity is weakening. Rong Viet Securities said average daily matched trading value on the Ho Chi Minh City Stock Exchange was 12.38 trillion dong in October, the lowest since the start of 2025. Foreign investors sold a net amount of more than 24 trillion dong that month. Thien Viet Securities said that, as of the end of October, only 31.8% of stocks on the exchange were trading above their 200-day moving averages. SGI Capital believes individual margin defaults may continue amid high interest rates and declining liquidity in asset markets. A sharp stock market decline accompanied by unexpected negative news could also trigger forced selling on a wider scale.

Source: VietVance