/Stock Borrowing & Lending (SBL)
To allow you to make profit in a bear market, GF Securities (Hong Kong) offers SBL services for securities listed in Hong Kong as indicated in the "Designated Securities Eligible for Short Selling" on the HKEX’s website (excluding China A-shares traded through the SH-HK/SZ-HK Stock Connect).
When you anticipate that the stock market index or the price of some equities will decline, you may call our Dealing Department to borrow stock. The borrowing procedure will be completed successfully and you may then call our Dealing Department to sell the equities at any time if the equities you expect to borrow are available for borrowing, your margin account has sufficient initial margin and you accept relevant borrowing conditions.
You may then purchase the borrowed equities at a lower price to generate a return, and thus make a profit from the spread. Our company’s simple SBL procedure gives you with the opportunity to make profit in a bear market.
1. Open an SBL account with GF Securities (Hong Kong).
2.Call our Dealing Department on 40086-95575 (Mainland China) or +852 – 37191201 (Hong Kong) to check whether there is any equity available for short selling.
3. It is assumed that the initial margin ratio is 125% (calculated as per closing price of the equity concerned on the same day). So the client must deposit margin in his/her equity account prior to borrowing the equity. Our Dealing Department will calculate the initial margin based on the real-time market price temporarily when the closing price is unknown and determine the final amount after quotation closing.
For example, the closing price of HKEX (00388) is HK$100 and a client borrows 1,000 shares of HKEX with an initial margin of HK$125,000, then (HK$100 x 1000 Shares x 125% = HK$ 125,000)
4. Dealer confirms the stock is borrowed successfully for the client.
1. If the client wants to short sell the stock that was borrowed, he/she must place the short sell order with our dealer.
2. The initial margin (HK$125,000) will be deducted from the securities account of the client on T+2.
3. If the maintenance margin is insufficient as a result of a continuous increase in the stock price after the successful stock borrowing, the client may receive a margin call.
Example of Margin Call Cover: If the stock price of HKEX rises to HK$110, the maintenance margin would be HK$126,500 (110 × 1,000 × 115%) and the client only deposited HK$125,000 as the initial margin; the margin will be in shortage and the client will receive a margin call. The amount to be replenished by the client = HK$12,500 [(110 × 1,000 Shares × 125%) - 125,000]
In contrast, the client may request to withdraw part of his/her margin if the stock price falls continuously.
Example of Withdrawal of Part of Margin: If the closing price of HKEX is HK$90, the margin required is 90 × 1,000 Shares × 125% = 112,500 and the client has deposited HK$125,000 as the initial margin, which has exceeded the amount required, the client may ask to transfer part of the initial margin back to his/her securities account, which should be HK$12,500 (125,000 - $90 × 1000 × 1.25).
1. When the stock price of HKEX drops to the client’s target price, the client may buy back and return the stock.
2. You may buy the stock back through the Dealing Department and notify the dealer to return the stock; otherwise the stock borrowing transaction will not be considered complete.
3. The margin of HK$125,000 will be transferred to the client’s securities account and the borrowed stock will be transferred from the same account on T+2; thus the short selling transaction ends.
4. Relevant stock borrowing fees will also be deducted from the client’s securities account on the same day.