From the AFR this morning comes news that as the ASX has been hitting the highs lately, margin debt is just one-third of the size it was back in 2008.
Margin debt allows investors and traders to leverage their positions and in doing so, take more risk in order to get a better return if stocks rise.
So while Australian investors haven’t been taking on too much risk recently, it seems that is about to change up here near the highs.
Rowan Fell, Bell Potter’s Director of Margin lending, told the AFR:
Particularly in the last month or so during October, the temperature of interest in margin lending has shown a marked increase, which is what you would expect,” he says. “We’re just seeing the early signs of that interest start to translate into increases in loan books. I’m not saying it’s happening yet, but it feels like it’s just about to happen.
Increased leverage near the highs!