There is no thread on this topic and i am thinking of doing some borrowing until my money comes in to take advantage of the current financial turmoil

Let's discuss the PRO's and CON's

And experience if any.

---

Added on January 17, 2008, 2:11 pmCIMB is offering BLR+0.75%

This post has been edited by Neo18: Jan 17 2008, 02:11 PM

My advice is don't use it, it is a highly risky game, only use when or know prefectly what are you doing.

Share margin only good when bull time, at bad time, you double the losses. Imagine you do share margin account, your holding of shares value become lesser, while still need to pay up the bank on interest. Also when share price goes down, you will be facing margin call to top up.

Dear Cherroy,

Yes, I know the risk involved... But i plan to take loan only for 2 month period until my CASH comes in. Then i plan to pay up immediately

ok, that's different as said know what you are doing. If just for the sake to 'double up' without cash backing in near term, 90% will result in some unwanted circumstances. I have seen a lot of individual using margin account to 'double or triple up', eventually most (8/10) resulted in bigger losses.

Share margin is good for syndicate to use short term cash for their 'goreng' purposes but doesn't mean surely gain also for them, there are plenty of 'fail goreng' too.

Why you really need to use the share margin to buy right now, can't wait another 2 months? share might be cheaper then or can be more expensive.

This post has been edited by cherroy: Jan 17 2008, 02:31 PM

If you confirm will pay me back, I lend you at BLR enough le... better than I go in stock market myself... sure win.

why would want to borrow money to buy stock?

agree with cherroy, share might become cheaper in 2-months time (of course i don't deny that it might also appreciate)

however if really missed the boat, there is always another chance coming up, no?

actually i told myself this:-

for good fundamental counter, if the price comes down 10% from my cost, i will do Dollar Cost Averaging.

It happen yesterday and also was there this morning, until it rebounded.

That is why i was thinking about buying more!!! but unfortunately no bullet...

It has got nothing to do if in 2 month time, it will come down more.

Ok fair enough.

But what if it drops another 10%, average again using margin? then it drop further another 10% doing triple margin on it?

buy transmile again?

He disposed already, if not mistaken.

transmile got no fundamental la.. i dispose liow!!!i bought because Robert Kuok bought!! not a good reason, i know!!!

i was thinking of buying Petra Perdana. I bought @RM5 it went down to 4.66..

this counter very strong fundamental la...

Can you list out points stating Petra Perdana sounds strong fundamental? I personally dont think so...
The company is so new that it just listed last year...


This post has been edited by keith_hjinhoh: Jan 17 2008, 09:54 PM

If things really go your way all the time like you describe, do you think you will face the situation you are in right now.
Market will go up and down.
If your 'eye' really that sharp, you should have bought it earlier rather than buying at the highest price.
Just let it go.

If you lose all your savings, you can start new. But if you bancruptcy, then you are done for good.
Just look at how many STEEL counters that has gone bust. STEEL price going up till now and never really drops.
Yet counters like Wing Tiek Holdings, NCK all gone bust.

Another point to make, it is always advisable (don't mean it is a must) share margin or leverage play when shares are really damm cheap and trade at insane cheap level. In between, If you can get right everytime, then share margin will make you rich, but if not, better becareful.

Just like I posted the sceario, it drop from 5 to 4.50, you do share margin, then market continue to drop, then it become 4.00, margin again? then become 3.50, another margin? at that time, you pay triple interest charges, only when shares rebound back quickly to 4.50-5 then you are making a gain. But if shares price stay and stagnant at that level, then you are paying 3x interest to banks. So if shares only rebound to 5.00 after 2-3 years, you gain nothing as interest can 'eat up' your gain.
But to be fair, on the other hand, if shares do rebound and shoot higher to 6-7, then you earn 3x profit.

Just my 2 cents, judge your own.

in Malaysian market, you only can go mostly long position.. margin financaing will kill you once the market tumble.. as you can't go to a short position fast

Anyone mind to share what is the share margin or leverage rates currently available in Malaysia? As in how high can the margin be? Does every bank has their own margin or what? Thanks

It depends, as far as I knows, it can be varied depends on banks and individual credit creditibility.

I work for a stock broker, and from the comments of staff and remisiers, they sum up that most margin clients lose money over the long term. So, no money, don't play. Don't go and play with borrowed money.

Yes, most margin users are losing money rather than making one. You only use margin when in bull run, in other time, you are almost surely lose out as you have 1/3 of chance of winning.

Market up - gain
Market stagnant - loss out on interest charges
Market down - loss out on interest charges + capital.

OK, I have some newbie questions. How does share financing work?

1. Lets say I have $10k worth of shares in my account. Will I be given another $10k of margin to buy stocks?

2. If I buy $20k worth of shares, and these are bought with $10k in cash and $10k in margin financing. So comes T+3, do I settle $10k or $20k?

3. Is the interest rate charged on the financing a monthly rate or annual rate?

4. If I share finance $10k to buy $10k worth of shares, what will happen when the share price drops to $8k? Do I have to top up cash $2k? If the shares rise back to $10k, will I get back my $2k?

5. Can I just pay the interest alone, or do I have to interest + principal (like a loan installment)?

This post has been edited by simplesmile: Apr 18 2009, 07:58 AM

Depends on the bank.

1. Maybank's share margin is working more or less this way

2. U still settle all, your margin account goes up 10K

3. Charged monthly if not mistaken, but calculated daily for M2U

4. Based on PURCHASE PRICE, or loaned amount, not market price.

5. I'm not sure, should be interest only, unless either u close the margin account or maybe margin expiry? Based on M2U agent, they mentioned no duration limit!!!




For those still into this, M2U is having promotion till June I think.
Interest is BLR - some percentage, forgot.
I think net is around 3.XX percent, quite cheap I think.
Sound ok to even just buy, say Guiness and just wait for dividend...

Apply before June, u will be entitled to a fixed rate FOREVER.
I didnt believe that as well, but that is what the agent told me over the phone.
I'm gonna go check it out soon.

1. Depends on ER

2. T+4 u start to pay interest on you purchased contract

3. Intest is calculaed on daily basis and payable at the end of each month.

4. Don't have to refer to calculation.


Had a brief stint with dealing with Margn Agreements, so correct me if I am wrong...

Why Margin Facility?
Say a person has substantial amount of shares in an account, he/she is probably holding it for the long haul (cause they are dividend yielding stocks or probably he/she is a director of a company) probably 1 yr?

If your holding your shares, even if there is appreciation or depreciation of value in the said shares... the gain/loss is merely on paper is a person does not realize the value.

So basically if you have shares sitting in an account for a period of 1 year not re-generating any profits (execpt in the case of dividends etc..), its no different from putting your money under the pillow.

One of the unique features of Margin Facility is to allow you to utilize this shares as collateral (shares unlike properties are considered much more volatile, most commercial banks would not accept it as good collateral) after a certain haircut imposed by the Investment Bank.

***

What types of Collateral are acceptable?

1. Shares (namely those permitted by Bursa, main board shares)
2. Cash
3. Though there are other collaterals which are deemed acceptable to the bank, but generally speaking the industry only accepts 1 & 2 above. (if otherwise correct me)

***

The determining factor of when you can withdraw or required to top up your Margin Facility are determined by 3 Equity Ratio (I only know the %pecentage but i don't know exactly how it operates)

180% - equity ratio - allows u to withdraw surplus funds
150% - Margin Call - you can only sell at this level or top up
140% - Force sell - immediate liquidation without notice

the % if you notice may vary from those prescribed from Bursa, for the purpose of margin financing.. certain banks will impose a higher ratio to manage (off set) their clients risk.

***

Last min updated:

Calcluation of Equity Ratio

ER = TMV / OS

ER= Equity Ratio
TMV = Total Market Value of Purchase + Collateral
OS = Net Outstanding Balance (ecl cash deposits)

***

Fees Payable during the tenure of a Margin Facility:

Rollover interest = X% service charge on the total amount outstading of all purchases due and owing as at the date of renewal (normally a margin facility will run for 3 months)

Interest =
1. X% interest will be calculated on a daily basis to be settled monthy (end of the month)
2. Interest chargeable at the from T+4 from the date of contract for purchases.

Commitment Fee
X% based on daily unutilised facility amount to be calculated monthly

***

Another Note*

You will find in some agreements that Margin Facility agreement isn't for INVESTMENT PURPOSES (long/short term), its a must have tool for Speculators (Intra day) but not Investors.

- notice the "commitment fee".

***

The Con of Margin Financing is...
1. If you not using the facility its going to cost you money
2. if you leave it idle more than 30 days from the first day you opened it, the Bank will cancel ur facility
3. Only for intraday player.


This post has been edited by aurora97: Apr 22 2009, 03:19 PM

Just want to ask what you mean by if the facility is not being use, it will cost money?

Previously I'd signed up for Maybank2u, they asked me to open two account. One is Cash one & the other one had margin facility. However, I have not been doing margin type of trading. Even for my margin account, I also bank in cash first(i.e. not using the facility). So far I didn't see any additional charges in my statement. [Note: If there are charges, I will go & cancel this account because I absolutely don't want to fall into trap]

This post has been edited by whizzer: Apr 22 2009, 04:24 PM

Meaning say your approved limit is Rm 500,000 and you only manage to use say RM 10,000. With the balance Rm 490,000 unused. The interest payable on the unutilised portion would be Rm 4900 i.e. 1% commitment fee.

Perhaps other banks offer more competitive packages i don't know, i didnt read your agreement so i can't comment on that. You'd probably know f the is any additional charges at the end of the month or the conclusion of the Margin Facility cycle i.e. 3 months.

***
Investment Bank

Where does the money come from to finance investment facilities like Margin Financing.

I believe this it how it works. You see Investments Bank don't take deposits so basically, IB are already at a disadvanatge. You need money to make money.

So with limited funds an IB has to allocate and give out inter-company loans in order for its subsidiaries to carry out its businesses. In return when this subsidiary grows in size together with a fat bank account, the subsidiary may opt to pay dividend.

*by the way most of this loans to my knowledge never gets repayed, effectively sucking the holdings company (mother company) dry.

Margin Department
This is where indirectly if u can get where I am going at, the Investment Bank is indirectly financing its clients to purchase/sell shares in the open market.

On a lighter note:
- Hence making money out of nothing except for paying the interest and all, other than that ur basically using the banks money to make more money!

On the darker side:
- Margin contributes to some extent to the NPL of an Investment Bank.

So why the commitment fee and potentially charges being added onto the unused portion of the facility? Is because the IB will lose out since it eats into the allocation of monies.



This post has been edited by aurora97: Apr 22 2009, 05:23 PM

Margin trading account and margin financing is two different thing.
Margin trading account is whereby u can buy without upfront money, then top up before T+3.

For M2U margin financing (MF), the good thing from what I was told, is no charges if you don't use, except for the first time minimal application charges, or maybe some yearly fixed charges.

Also I was told they only charge based on the margin account usage, not the margin account limit.

The M2U MF application form has some fields for asset declaration, as well as debt declaration. I suppose every bank / scheme has some formula for margin limit calculation.

Remember also this is SHARE MARGIN FINANCING, so probably u cannot take out cash.

I don't quite agree with keeping shares for dividend is equiv to keeping cash under pillow.
Many of my shares are giving good enough dividend to warrant paying for long term.
Guiness is one such share.

I'm not sure how the banks can categorize your share purchase for investment purposes, or for speculating. I'm guessing its just a guideline.

Whizzer, thanks for mentioning commitment fees, I will check out if the M2U MF indeed has no commitment fees, and also on the calculation for rollover interest.
Will also definitely pay attention to any equity ratio.

Ok. I don't remember signing anything about the facility. Could be that my accounts are both non-margin type ? Its been more than 3 months (so your explanation about the 1% commitmt fee leaves me worried )

Anyway, I open the two accounts last year. Can help to explain the product type ?
Product Type : Z001 - Non-Margin Tempatan
Product Type : D001 - MI Cash Tempatan

The only difference I observe is that the Z001 allows me to buy 2x the market value of the shares I have without me having to have the cash in my account.

---

Added on April 22, 2009, 6:09 pmDidnt see this post I guess mine is margin trading account. Now i wonder why I have two. Guess I didn't really do my homework before signing up.

This post has been edited by whizzer: Apr 22 2009, 06:10 PM

Thanks for clarification.

Margin Trading Account, used this before in HKEbroking... damn shock can even request for increase limit if u burn out the margin trading account. (that is if u have gd track record )

**

I am talking Margin Financing, BUT in relations to MY INVESTMENT BANK not HLE, not MAybank, Not CIMB but my bank.

Also I was told they only charge based on the margin account usage, not the margin account limit.

This is correct perception, but some banks like mine also attach commitment fees payable on the unused portion.

Say your Margin Facility limit is 800,000 granted to you, and u used only about Rm 100,000 (this will incurr the standard agreed interest of X%).. the balance 700,000 will incurr commitment fee charges of X%

***

The M2U MF application form has some fields for asset declaration, as well as debt declaration. I suppose every bank / scheme has some formula for margin limit calculation.

Asset declaration or debt declaration, to my knowledge is merely an over and above requirement imposed on Client. (unless ur talking about Foreign Share Trading - declaration is mandatory)

The calculation is listed above.

I think you one is a Margin Trading Account not Margin Financing...

I think is PBB is offering 4.5%, quite a good rates compare to other bank.

Haiya... just went MBB Investment Centre to check out the promotion.
Seems that I have missed the boat for 3.75% margin financing account!!! If your margin limit is 250K+, it was even lower at 3.25%.

They have increased the rate to around 4.5% (below 250K) liao...
But still okay rate lah.

I have also confirmed that the rate is fixed FOREVER!

Also, no commitment fee below 250K approved limit.
But first time charges quite high around RM700.

For equity ratio, it is around 65%.
Eg, if your shares value is 100K, and your margin financing account is at around 65K, then you will have to either top up money or sell some shares.
So safest to apply limit of 50K if you holding 100K shares, then use only up to 50% of approved limit.

I have also checked and no limitation on what kind of shares you can buy, eg long term / contra also can.

for those taking margin to play share.

I wanna share my experience with you.

Please do not max out your margin facility if you got no intention to top up monthly (injecting capital on a monthly basis)

example,

you have 100k, you can get 150k margin. Meaning you can trade 250k.

Please do not max out 250 in one go.. best is buy to a range of 66 to 75%.. for 250k, meaning 165k to 188k.. this is to safeguard against margin call..

2nd tip.. please allocate some money to inject into your margin facility every month.

3rd tip.. BLR is the lowest right now. the only way BLR is going is -- UP UP UP UP UP!!!

so plan and be prepared for that

i have RM10k in my CDS hlebroking account.But my trading limit is RM20k.
If i deposit RM10k into margin account...would it be like having RM40k trading limit? RM10k cash deposited in + RM10k(margin financed)=RM20k then double up=RM40k?

for most share margin facility, you get 1.5 ratio

meaning,

if u deposit RM10k, you get 15k margin.. meaning u can trade = 10 + 15 = 25k

Hmmm..

1. I already have HLEbroking account, do I still need to provide any information to upgrade to Share Margin Financing account?

2. How does the interest goes? For like extra 10k how many should I pay? Do I need to settle my interest every month or by just settling the interest and not the whole share price of certain stock?

3. Margin finance give me 1.5 ratio but my HLEbroking already give me 2 ratio

4. Does all the rules apply same as normal broking account? Like when I selled all share on one stock, the interest charge will gone on that particular stock that I sold?

Please guide me sifu ^^ I'm ready to sell my body to stock market.. LoL jk

This post has been edited by shoduken: May 18 2009, 10:26 PM

1. You have to apply for this facility. I don't think you need any additional criteria

2. Interest is BLR - 1.75%, you might get lower for HLE. For extra 10k, you should have stock worth 10k, fully paid off. Yes, you settle your interest everymonth, thru deduction from your current account. You are not allow to make withdrawal from current account

3. good if they give you 2 time ratio

4. Interest charge is not gone when you sell your stock. Interest and your stock at hand got no corelattion at all...

Please becareful of SMF.. if you cannot take the heat, becareful of playing with fire

Lets say I pledge 200lots of STAREIT for margin facility. Then I buy more of the same shares with the margin amount. In theory, it will be self sustaining right? ie. dividend will be more than enough to cover interest.

Those margin sifus, how risky do you think this strategy is?
1 = no risk, 10 = Very risky

Thx

My thoughts based solely on theory...
Probably in theory yes it might do the trick...

The performance of the Reit counter,
other factors like act of god (entire building got burnt down )
sudden announcement stating no dividend for that year
negated market volitility,
top ups (margin calls),
Fees/Expenses, cost, losses that you need to finance your purchase,
commitment fees
rollover fees
taxes
commission

etc.....

Yeah, agree. There's still lots of other unsystematic risk to consider.

My thinking is that, after deducting the interest from the income return, there's still a spread of 4-6% to account for the risk. Im still unsure whether its worth taking the risk for an extra 4-6% return.

If you are certain that the price of the reit will not fall,and the total yearly distribution will remain or increase,and that interest rate charged will remain unchanged,then it is worth trying.

But nothing is certain in this world.Also bear in mind that single stock financing is not acceptable to many broking firms.

Yes, this is what we call carry trade.

This is always a risky move. Only do if you afford and dare to take the risk and fully aware the consequences.
Lot of people burnt more than people gain through this way, because of greed and timing. Main reason, people only want to do margin facility when market is bullish time aka market has run up significantly only then people turns more greed want to trade more so using margin.

If market turns out to be good, one can get wealthy very fast, as you put on leverage, people gain 1 you gain 2, so multiply the long term and repeating effect, you will be rich very soon.
People go from 1 to 2 to 4, you go from 2,4,16.

If market turns out to be against you, double trouble, loss on capital while still need to pay interest, worst still can't meet margin call, then have to sell everything to repay. Even market does rebound back, you actually game over as you have to sell everything you got.

One word, nothing is predictable in stock market and market always not behaving what people expected.

One word, nothing is predictable in stock market and market always not behaving what people expected.

[/quote]

manyak setuju woo..

True, I realised MBB has a cap value on some of my shares in my portfolio.


hmm.. reason I'm considering this Im planning to keep it long term. How about if I gear 50%? With 500 lots in cash, and borrow to buy another 250 lots - does that help to mitigate risks? At least, I don't need to worry about margin call if prices fall in the short-term.

My main concern is actually if it is worth the risk? the extra return will not be huge, as compared to people taking margin and goreng in a bullish market.

Guys,

May i know anyone out there using margin financing at a better rate then BLR - 1.75%?

PB Sharelink Margin is giving that. Plan to open another account if the margin rate is more competitive

I just realize i work in an Ah Long bank, i suggest you don't come to my bank..

Possibly that MBB is no longer giving discount.
A friend & forummer here was quoted BLR + 1.5 recently.

I have secured mine at BLR -1.5 just a month or two back from MBB for 250K limit with no commitment fee.

For MBB BLR -1.75, is for margin limits above RM500K, but will incur commitment fee.

The no commitment fee is reason why I didn't apply for the BLR -1.75 package.

MBB's safe FMR ratio is around 60%, eg 0.6 when I applied.
However, this ratio is revised time to time, depending on market conditions.

If u dun mind the initial costs, having a margin is equiv to bank overdraft facility, but cheaper rates.
T+3? No problem, pick it up and sell off later, if u're confident of the counter.
Having this safety net will make a huge difference for those who trades contra regularly.

U can try

http://www.allianceinvestmentbank.com.my/a...maximargin.html

can nego better rates when have seminars/roadshow ... quite some in KL during this 2 months..

only few branches tho' ....

I am using Hlebroking, following question is quoted from HLebroking FAQ section


What is my trading limit in HLeBroking Account?

Collateral Type

Trading Limit
Cash 2x
Share nil



Is that mean that i can buy 2 times the current cash that i hold in my share account? Eg: i have RM10k cash , then i can buy 2 times my cash which i mean i can buy RM 20k worth of stock.


And if the answer is yes, why do we still need to do share margin trading financing. Since we already can double up our current cash position.

Thank you

This post has been edited by chin20350: Jul 29 2009, 04:39 PM

For HLebroking, you will only be dealing with their central office. no Hong Leong branch provide stock broking department or able to advise anything on share broking/margin.

Coming back to your question, I just enquire from HL last week.

I think their webpage is outdated.

you can only trade up to 1.5x
meaning, if you put in RM10k,
you can trade up to 25k (meaning 10k your money + 15k bank money)

I find their rate not very competitive,

they are giving BLR - 1%
If you trade more than 500k, then only you get BLR - 1.75%
however, for the first 3 month of opening account, you will get 10% on all your month end interest charges, to encourage you to open account

Hope that help.

For Share margin, so far, the best is still Public Bank and Maybank

Our IB,Aminvestment,can offer lowest 5.5 % subject to T&C.

Can pm me for more details.

u mean BLR @ 5.5?
what about total?
can get BLR - 2 %?

Our rate is 5.5 % now with T&C,not pegged.

Anyone doing share margin financing here? I need someone to approve my application... I have about 15k in cash and 35k in stocks, but the issue is that I'm currently still studying and I have 2 more years to go before I can graduate.

I'm willing to take a much lower margin in to reduce any risk that the bank might be taking on.

I can give all the research that I've done on the company.











on a side note...

---

Added on July 30, 2009, 10:28 pmfunny.. i actually called them up recently and their rate is actually 1.8x if u have share collateral and 2.8x if u have cash... but they don't want to do my business..... lol... even after I tell them i'm willing to take 0.5x only.

This post has been edited by flight: Jul 30 2009, 10:30 PM

How Does Share Margin Financing (SMF) Works?
refer this http://stockmarket.tailou.com/viewtopic.ph...3c7fb88d9dbd6bc

hi guys...

want to ask about collateral for SMF. i was told that for collateral FD is accepted. if i have FD for e.g. in Maybank like 50k, can i apply for SMF from other bank/brokers? is it is it possible to use the same FD to apply for than one SMF from different banks/brokers??

So for a HLebroking account , how much i can buy if i have rm10k cash?

is it possible for me to buy RM20k worth of stock without using SMF?? I just feel that it is very inconvenient for me to apply for SMF.


Because what i see from FAQ at HLB homepage. HLB FAQ
What is my trading limit in HLeBroking Account?

Collateral Type

Trading Limit
Cash 2x
Share nil

This post has been edited by chin20350: Jul 31 2009, 01:54 PM

u've really got to have some sort of exit strategy when u're dabbling with share margin....

personally, i don't because i find it a hassle to top-up for each margin call.....

my principle....don't play if you don't have the money.....but that's only myself.....others would say no risk no gain...

Any cheapest housing loan available in the market. Plan to refinance my house to buy share.

try to go for maybank and eonbank for housing loan, i had been working for eon bank b4, and my colleague told me that the cheapest housing loan in malaysia is maybank and eonbank.

this is a bit off topic but try money3.com for house loan comparison. pretty good and up to date

there is another way similar to margin call CFD.
CFD is an investment instrument that allows you to participate in the price movement of an underlying share. The CFD contract is an agreement to buy (Long) or ‘short-sell’ (Short) an underlying share. Investors increasingly look to CFD to profit in both the rising and falling markets.CFD allows you to hold a more diversified portfolio when you can leverage up to 6.67 times on your initial capital. Trade from margin requirements as low as 15%, which is marked-to-market daily.

say genting 6.45 today which i can buy just using 1.29 . (20% margin)
its a double-edge sword. max profit gaining, and max losses vice versa.

i had been playing with CFD in sti for 2years and turn out my losses are triple times of my initial capital.

This post has been edited by ianchew: Aug 3 2009, 06:00 PM

Neo,

RHB Bank latest offer started this month September 09 ..

SMF
FD/CASH - 2X
Quoted Shares - 1X

Facility Type - OD with no cheque book

- no cap of market price Main Board Counter
- 100% value of Main Board & Warrant

Interest
- >500K BLR-2% for 1st year...and -0.5 there after (can nego after 1 year if u r a good payer..hahaha
<500K BLR - 1.75% for 1st year.. and - 0.5 there after

RHB Bank pay interest on credit balance in your acc...

Rollover - Waived
- Stamp duty charged 0.5% upon appreoved limit...
- >500K SMF, stamp duty refundable - term & cond.
Payment - at anytime and on demand

Margin Call - MOA > 67%

This post has been edited by tessei: Sep 6 2009, 01:24 AM

What are the conditions set by RHB for getting th overdraft? They look at just the shares you have in hand?

I've a Non-Margin Tempatan a/c toput cash in for online trading.But i could not seem to transfer the money out of this tranding a/c tomy savings(both ATM and online not working) anyone has same prob?

Investing via share margin may coz double the risk. half cent tots only.

funny that u should say that. Go back and read the first post and u can see someone applying for SMF, while another person is saying how risky it is. If he had gone ahead with his SMF. I bet now he would have easily tripled his cash.

Some risks are definitely worth taking, but maybe not while the market is topping new highs no?

Don't let the junior know it all's tell u what works and doesnt, because they really have no idea.

OMG, guys, i just noticed my dividend that i received recently has a RM 2.50 charged! and it doesnt even tell you its fees charged..

i noticed when i see the tax cert for dividend and compare the total amount receivable and the the amount that has been deposited in my account...what the.. RM 2.50 charged each time a payment of dividend.. no wonder they get so much profit !

Investing on margins is the best that can happen to you if you can get it.
You can leverage your capital to the fullest for maximum profit.
Every investment must have its own exit plan. If you just follow that plan it should be ok otherwise you are having a wrong plan.

Some experts are talking about a second economy dip early 2010. After missing out on the dip in early 2009, this time around I am eager not to miss the 2010 dip (if it ever happens).

Some of you have taken out share margin financing and bought stocks on the cheap. And I believe these people have made handsome capital gains. I have some questions about share margin financing.

1. Is it a requirement to transfer my existing shares to the bank offering me the share margin financing facility? Can I get any facility without transferring my existing shares?
2. If I bank in cash as my collateral, can i use the CASH + Margin for trading, or just allowed to use the Margin only?
3. How much margin can I get with lets say 10k cash & 100k stocks as collateral?
4. Is the interest rate BLR minus, or BLR plus? which bank offers the cheapest rate?
5. Is share margin financing the same as share financing?
6. What's the opposite of a share cash account?

This post has been edited by simplesmile: Nov 28 2009, 12:54 PM

Q1...No need you may need to open up another CDS A/c just for the margin A/C

Q2. Yes.. cash + margin... CIMB investment BB give 60% margin
eg: If you bank in 40K cash you can trade 100K
or you deposit 40K of security value you can trade another 60K (NB: in CIMB Security value is determine by the the bank... blue chip are taken in 100% of the closing but some lake MSPORTs is only accepted at 80% of closing and cap to RM0.85 and some like AUTOAIR have sero security value)
Q3 for 10k cash you should get RM25K
100K stock depend on what stock. You may get between 150K to Zero more( if all the stock blue Chips like CIMB or SIME you should get 150K more if all are SAAG or a like you may get very little.)
Q4. About BLR that shouldn't bother you they pay small interest on debit balance.
you want to know more call CIMB IBB at 603 2084 9802/03/04/05
Q5 and Q6 too technical for me...

This post has been edited by rosdi1: Nov 28 2009, 02:53 PM

Thanks for taking the time to answer me.

For Q2: If I bank in 40k cash, I can trade 100k. Do I have to settle this 100k on T+3? Or can I just carry on the loan and just pay the interest?

yes you can use the 100K don't have to worry about T+3.
( but 100k security value can be less than real 100K if you don't buy the blue chip. For example if you buy MSPORTS you can only buy 80K worth)

in my case I never have problem since I deposit all my stock investment into the margin account and I only take 25% to 30% margin of the whole stock value.(even when they are willing to give me double the amount)

This post has been edited by rosdi1: Nov 28 2009, 04:33 PM

i see. thanks for the explanation.

please don't.

Safe investment rule no. 5: Use only money you do not need to feed yourself and family.

ya don... u never know what can happen here, ONLY buy stocks with excess money. Because stocks will not only rise but also will fall, and the more u buy, the more u earn or ..loss.

Margin is very dangerous if u don get mentally prepared, u can be rich or u can be bankrupt, so no joke issue here, think and play very carefully my fren...

This post has been edited by pete999: Nov 30 2009, 09:21 PM

im also planning to apply personal loan just for buying stock, since share margin need colateral 50k.

This post has been edited by mmusang: Nov 30 2009, 10:22 PM

Where to get the best deal now?

Totally agreed..
It is playing with bombs and explosive..

If I'm not mistaken, CIMB is currently offering BLR-2.

A margin is more like a tool.
Any tool used improperly will hurt the user.

Got this from CIMB

Collaterals : Quoted Share, Cash or Fixed Deposit
Margin of Financing : Up to 60%
Financing Amount : Min: RM50,000 Max: RM5 million

What does this portion mean? If I want to borrow RM50,000 then I must put in cash of RM83,333? Then I get financing of RM83,333 x 60% = RM50,000 ?

If you want to have RM50,000 in your margin trading account, at least need around 25k asset with them (I refer to PB Bank).. In cash, fixed deposit, current shares holdings and others..

Nope, you just need securities worth RM83,333 but it is subject to their capping as not all shares are valued at 100% of its closing price.
i.e. PBB maybe be valued or 100% while TALAM may be valued at 30%.

CIMB margin account is BLR - 2%

Margin of Finance is 60%

with that example, if you put in cash rm 50,000, you can buy up to 2.5x meaning rm 125,000

60% margin meaning if the shares value drop to RM 75,000 (125k x 60%) there will be a margin call, of course you need to becareful with the counters you bought as there are capping and not full value given ( you can get the marginable counters and its capping).

If you use shares as collateral then the value will be based on the marginable list up to 1.5x

This is very cheap cost of fund and proven useful during a bullish market, however it will be a double-edged sword during market down trend

Pm for more info

This post has been edited by Remng: Mar 25 2011, 08:20 AM

is cimb blr-2 interest rate still available?

or there is cheaper option from other bank for share margin financing?

No, effective rate is 5.88 % p.a. Of course when you took 2 years as the tenure, the interest rate will be 5.88 % x 2. No compound interest and any hidden charges. How do I know, because I did took some loan to start off my share financing last year October and my repayment will be concluded in 2 months time.

I took a 10k loan, so I get 10k and every month I need to install 882.33.

Check count,

Meaning every month, I'm making a repayment of 833.33 principal + 49 interest portion = RM 882.33 installment per month

882.33 * 12 months = 10,588 (RM 10,000 principal + RM 588 interest portion).

And this is not the first time I've experience this way of financing, because this year I did advise some of my friends to cash advance from the dial a cash transfer to finance some of their business costs and capital. Tentatively, the rate is reasonable, hence I would say it is lower than personal loan (always 7-9 %). Please do not cash advance from ATM machines via credit card, as the rate is exorbitant, 18 % per annum and 5 % advance fee on the sum of withdrawal.

Interest financing is fine s long as you can finance them. So do not overlook it and always ask more of the details and do a check count before taking them. Cheers.

This post has been edited by andrewckj: Sep 20 2011, 11:39 AM

opps... if like that effective is 5.8%. Great deal!!!

is it only open for bumi?

Hi, got a dummy question on margin calculation. Assume:

Initial cash: 10,000
Finance: x2.5 or 60%
Max limit: 25,000
Margin call at: 50%

If I use up all 25,000 to buy stock A at RM1. How to calculate the share price that will trigger margin call? If possible, I need the formula.
Thanks.

Anyone know of any investment banks in Malaysia that offer margin financing for buying shares in Singapore and Hong Kong stock exchanges?