King Wan Corporation

[GFG]

Leverage. Its basically Margin trading. Pledge shares leverage lower and there is cdp transfer costs involved. Pledge cash higher leverage that's all. They charge you interest for the leverage amount and some other fees per quarter and annually.

?天堂与地狱?就在当下

Yup that's basically it

I get very attractive tiered rates, <3.5% while KW yield is ard 10% for me
So I earn on the spread
Plus the appreciation is tremendous this far

Danger is if you're not careful and don't have holding power, when you get margin calls you can end up having to sell at the wrong time so be careful with share financing schemes.
Anyone interested to know more can just drop me a msg.

When you do margin financing you lose control of the asset and there is counter party risk.

The 3 Kings fiasco already show us that the financier like GS can sell or demand for top up anytime they deemed appropriate.

Those who use Lehman as custodian will have higher appreciation of what is counterparty risk. It is not just risk of losing the money, it is that the segregated assets will take a long time to get back while you continue to bleed. Then there is of course the classic counterparty risk as in MF Global.

Sharp tools have to be handled carefully and appropriately

if you get financing from local companies and banks from POEMS, HLF or Orix Capital, its generally safe and not much counterparty risk to worry about.
But as with all forms of leverage, the big risk is margin calls so like I said, you want to be very certain of where you employ your leverage into, and you want to give a big buffer zone so that even if it drops substantially in the near term, you wont get margin calls.
And even if you do get a margin call, you want to prepare such that you have holding power.
So leveraging up several times into a PENNY stock like what happened in the fiasco is a crazy suicidal idea to me.

Can you in theory use the leverage to purchase more KWC shares and use those for further leverage?

Yes of course.