Margin debt hits record high: Breakout opportunity or 'time bomb'?

Outstanding margin loans in the Vietnamese stock market have reached nearly VND384,000 billion, the highest level in history. Behind that record number is a two-sided picture: Strong growth opportunities and potential risks from financial leverage are hotter than ever.

Margin heat and market euphoria

At the end of the third quarter of 2025, the Vietnamese stock market concluded a spectacular growth quarter with the VN-Index reaching 1,661.7 points, a 31% increase compared to the beginning of the year. Accompanying this was a new record high in margin lending, approximately 384,000 billion VND, an increase of over 54% compared to the beginning of the year – an unprecedented level in history.

The stock market is under pressure to liquidate with outstanding margin loans increasing sharply. Illustrative chart image

According to VietstockFinance statistics, the top 10 securities companies hold up to 61% of the total outstanding debt of the whole industry, equivalent to 233,000 billion VND. The two "giants" TCBS and SSI lead with outstanding debt of 41,700 and 39,200 billion VND respectively; followed by VPBankS, VPS, HSC. Notably, VPBankS and VIX both recorded outstanding debt growth of more than 180% in just 9 months, demonstrating the heat of leveraged capital flows in the market.

Many opinions say that margin lending is becoming the main profit driver of the securities industry. However, the current growth rate far exceeds the system's capital absorption capacity. It can be seen that revenue from margin lending in the third quarter reached nearly VND9,400 billion, an increase of more than 50% over the same period. With a common margin interest rate of 10 - 13%/year, this is the source of revenue that brings the highest profit margin for securities companies today.

Meanwhile, a report by Vietdata Research shows that the total outstanding loan balance across the entire system (including margin loans and advances against sales) has reached approximately VND 383,000 billion, of which margin loans alone account for VND 370,000 billion, equivalent to 120% of the industry's equity, the highest level since 2022. This indicates that the financial leverage of the securities system is at its "hottest" phase in the last three years.

However, according to current law, total margin lending cannot exceed 2 times equity. With the above figure, the market has used more than 60% of its legal lending capacity. In the context of strong increase in F0 capital flow and widespread optimistic investment sentiment, this shows that leverage is approaching the risk threshold, potentially posing a risk of "capital overload" if the market experiences a sudden shock.

The stock market on October 20 plummeted, losing more than 94 points with 150 stocks hitting the floor due to margin liquidation. Screenshot

Commenting on this issue, Mr. Truong Hien Phuong, Senior Director of KIS Vietnam Securities, expressed concern: “Margin leverage is like a double-edged sword. It amplifies profits when the market rises, but it can also cause investors to lose capital twice as fast when stock prices fall by only 5-7%.”

In fact, the nearly 95-point drop of the VN-Index on October 20, 2025, is considered a typical example of the “domino margin call” effect, when a series of highly leveraged accounts were forced to sell due to falling stock prices and insufficient collateral. Experts say this is a warning for a market that is operating in a state of excitement but has high technical risks.

Financial reports of securities companies also show that systemic risks come not only from margin activities but also from the connection between margin and corporate bond investment. This has created a cross-credit chain between securities - banks - bonds. When the bond market fluctuates, the asset value of securities companies decreases, leading to a narrowing of margin limits, easily leading to a spiral of chain foreclosure sales, a risk that experts warn can spread if not controlled promptly.

The race to increase capital and the "margin bottleneck"

To maintain lending capacity, many securities companies are rushing to increase their charter capital. Notably, VPBank has announced plans to IPO 375 million shares to raise capital to VND 18,750 billion; while SSI, TCBS, and VPS are also expanding their scale to maintain their leading position in margin lending.

Assuming the entire industry reaches a total equity capital of approximately VND 331,000 billion, the maximum margin lending capacity under regulations is VND 663,000 billion, meaning there is still room for growth 1.7 times the current level. However, with an average growth rate of VND 80,000 billion per quarter, this capital could quickly be depleted if not replenished.

"The market isn't currently experiencing a margin call, but this growth momentum is difficult to sustain in the long term without a corresponding increase in capital. When borrowing demand exceeds limits, selling pressure from companies tightening margin requirements is unavoidable," warned an expert from SSI Research.

High margin also increases the pressure to liquidate. Illustrative photo

Faced with the rapid increase, experts believe that management agencies need to strictly control leverage risks with "soft cooling" measures. The amendment of Circular 91/2020/TT-BTC to increase the risk coefficient for "off-standard" loans and large advances is an important step to prevent the phenomenon of "hidden margin", which caused instability in the period 2021 - 2022.

From an investor's perspective, experts recommend not using leverage exceeding a ratio of 1:1, maintaining a minimum margin of 40-50%, focusing on blue-chip stocks, banks, securities and public investments, groups with good fundamentals and liquidity. Overusing leverage in a volatile market can easily make small investors "caught in a spiral of mortgage liquidation".

The Vietdata Research report also emphasizes that the biggest risk to the Vietnamese market currently lies not in macroeconomic factors but in the potential for excessive self-correction due to forced selling pressure.

However, positive signals remain, Vietnam's economy is expected to grow by 8% in 2025, while FTSE Russell has officially included Vietnam in the list of upgrading to secondary emerging market from September 2026, promising to attract billions of dollars of foreign capital. But to turn opportunities into sustainable advantages, the market needs a strong enough risk control system to ensure that margin capital flows do not become "technical bombs" that threaten general stability.

However, with the recent pressure of mortgage liquidation, the record margin debt is a mirror reflecting the confidence of investors in the Vietnamese stock market, but also a test of the risk management capacity of the entire financial system. Between the "golden opportunity" and the "bubble risk", the problem of balancing leverage is the key to determining the sustainability of the new growth cycle.

Source: https://baotintuc.vn/thi-truong-tien-te/du-no-margin-lap-dinh-ky-luc-co-hoi-but-pha-hay-qua-bom-no-cham-20251023163407482.htm