Margin Securities Service
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Margin Securities Service
Have you invested a large portion of your cash to various investment products for higher return? Have you ever needed to sell all the stocks for emergency cash flow even when stock price is decreasing? Or to stop profit even though the stock price keeps increasing? In view of good investment prospect, you may have also considered to leverage your capital to grasp more investment opportunities...
The above problems can be easily solved by using your stock holdings properly! CMB Wing Lung Bank (“the Bank”) is pleased to present you with CMB Wing Lung Securities Margin Trading Services2，to help you convert the stocks in your account into cash flexibly and conveniently with just a few steps!You can also operate your securities margin account easily via CMB Wing Lung Bank Mobile App. Click here(Chinese version only) to view the user manual.
Margin Securities Service of HK Stock , US Stock and A Shares Shared Margin Loan Limit for the three markets
The margin loan limit is shared among Hong Kong Stock, US Stock and A Shares market. The available margin loan limit of US Stock and A Shares will be calculated automatically in Hong Kong Dollar equivalent.
Loan amount up to 70% of the market value of stocks
Hong Kong Stocks, US Stocks and A Shares are included as Collaterals of Margin Securities Service, over hundreds of listed stocks are eligible for pledged and the percentage of margin financing varies from 30% to 70%1. You can get more loan amount when stock price goes up.Please click here to view the list of eligible stocks and the percentage of margin financing.
Preferential interest rate. No handling charge and commitment fee
Interest is accrued daily based on the loan balance and is collected at the end of each month. If the stock bought by the loan is sold on the same day, or if the loan is settled in full on or before the settlement day, no interest will be incurred.
Easy to apply, withdrawal and repayment are flexible and convenient
Repayment can be made anytime, while pledged stocks can also be sold anytime. Proceeds of sale of stocks will be deposited to securities account and used for loan repayment automatically.
Greater purchasing power boosted by leverage
Pledged loan enables greater purchasing power boosted by leverage. You can purchase more shares without using additional cash when there are potential investment opportunities.
Example: Assume that you have HKD50,000 cash and have bought stock A at HKD50, while the percentage of margin financing of stock A is 60% of the stock value.
| Cash Securities Account | Margin Securities Account | |
|---|---|---|
| Cash held | HKD50,000 | HKD50,000 |
| Amount available for buying stock | HKD50,000 | HKD125,000* [$50,000÷（100%- percentage of margin financing 60%）] |
| Number of shares bought | 1,000 shares | 2,500 shares |
| Required margin | --- | HKD50,000 |
| Loan amount | --- | HKD75,000 |
Scenario 1: Assume the stock price increases to HKD60 per share after 30 days^.
| Cash Securities Account | Margin Securities Account | |
|---|---|---|
| Margin level** | --- | 83.33% [$75,000÷(2,500 shares x$60x60%)] |
| Proceeds of sale of stock | HKD60,000 | HKD150,000 |
| Interest (Assume annualized percentage rate of the loan is 6.25%)3 |
--- | Approx.
HKD 385 [$75,000 x 6.25% x 30^/365] |
| Gross profit | HKD10,000 [$60,000-$50,000] |
HKD24,615 [$150,000-$125,000-$385] |
| Rate of return*** | 20% | Approx. 49% |
Scenario 2: Assume the stock price decreases to HKD41 after 30 days^.
| Cash Securities Account | Margin Securities Account | |
|---|---|---|
| Margin level** | --- | 121.95% [$75,000÷(2,500 shares x $41x60%)] |
| Proceeds of sale of stock | HKD41,000 | HKD102,500 |
| Interest (Assume annualized percentage rate of the loan is 6.25%)3 |
--- | Approx.
HKD 385 [$75,000 x 6.25% x 30^/365] |
| Loss | HKD9,000 [$41,000-$50,000] |
HKD22,885 [$102,500-$125,000-$385] |
| Rate of return*** | -18% | Approx. -46% |
Convert stocks into cash without selling the stocks
Loan can not only be used for stock purchase, but also provides you with standby cash in Hong Kong Dollar, US Dollar and RMB which can be withdrawn anytime. It allows you to use the fund more flexibly to meet your cash flow needs.
| Market value of the stock in Securities Margin Account | HKD125,000 |
| Loan amount | HKD75,000（$125,000 x Percentage of margin financing 60%） |
| Margin level** | 100%[$75,000÷（$125,000 x 60%）] |
* If you want to buy stock A at the market value of HKD125,000, you can have a loan amount of HKD75,000 (i.e., 60% of the market value of the stock). You only need to provide a margin of HKD50,000.
** Margin level=total loan amount÷loanable amount of the stock holdings. If the margin level exceeds 100%, customer needs to deposit required margin or sell the stock holdings until the margin level declines to below 100%. Otherwise, the Bank has the right to dispose of any stocks in the account at prevailing market prices until the margin level declines to below 100%.
*** Rate of return is the gross profit/loss divided by cash held, excluding transaction fees.
Flexible Use of Fund to Satisfy Cash Flow Needs
Warning: To borrow or not to borrow? Borrow only if you can repay!
Enquiry Hotline: 230 95555
Email: securities@cmbwinglungbank.com
- CMB Wing Lung Bank Limited (“the Bank”) has the right to determine and vary from time to time the list of eligible stocks and the percentage of margin financing without prior notice. Please refer to the Bank’s website www.cmbwinglungbank.com for details or contact the staff of the Bank. Generally speaking, the loan amount of a single stock is the multiple of the market value of shares and the percentage of margin financing. In the event of trading suspension of a stock for whatever reasons, the margin financing percentage of that stock will drop to 0% and will rise to the pre-set level upon resumption of trading. Whatever the market value of the stocks and the loanable amount, the total loan amount cannot exceed the approved financing limit of the Margin Securities Account.
- Customers need to open CMB Wing Lung Margin Securities Account with the Bank to use CMB Wing Lung Securities Margin Trading Services (“this Service”). Please refer to the General Conditions for Accounts and Services and Securities Account Operation Guide for the terms and conditions of this Service. Should there be any amendments to the terms and conditions, the latest release of the Bank shall prevail.
- The annualized percentage rate of the Margin Securities Account is P+1%. Prime rate (P) is the best lending rate offered by the Bank subject to fluctuations. For the Bank’s latest Prime Rate, please refer to the Bank’s website (Home>Personal>Investment>Financial Information>Interest Rates>HKD Best Lending Rate).
- In the event of any disputes over the content of this Service, terms and conditions of CMB Wing Lung Margin Securities Accounts, Securities Account Operation Guide and other restrictions, the Bank's explanation and decision shall be final.
- If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.
The above information is for reference only and does not constitute and should not be regarded as any offer to purchase or sell. Investment involves risks and the price of securities may fluctuate or even become worthless. Losses may be incurred rather than making a profit as a result of dealing in securities. You should carefully and independently consider whether the securities are suitable for you in light of your investment experience, objectives, financial position and risk profile. This advertisement has not been authorized by the Securities and Futures Commission. Independent professional advice should be obtained if necessary. Please read the relevant terms and conditions together with the risk disclosure statements in the General Conditions for Accounts and Services before making any investment decisions.
Transactions conducted through financing obtained through pledge loans are highly risky. The losses you may suffer could exceed the amount of the cash and other assets you have deposited as pledges with us. You could be asked within a short time to deposit extra margin or pay up for the interest. If you fail to pay the required margin or interest before the designated deadline, your pledge is likely to be sold without your consent. In addition, you are also liable for any shortage of fund in your account and for the interest due. Therefore, you are kindly advised to ponder if such financing arrangements suit your financial status and investment strategies.
Under certain market conditions, you may find it difficult or impossible to liquidate a position. In these circumstances, your loss will not be limited to your margin and may be a substantial amount in addition. You should not participate in margin trading unless you are willing to assume the risks associated with such transaction and are financially able to absorb losses.
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