KATHMANDU, JAN 06
The stock trading from outside the valley barely accounts for 2 percent of the total turnover, with the transaction in those places registered with the Nepal Stock Exchange (Nepse) logging only Rs 663.1 million out of the country’s total of Rs 33.15 billion in the the last three years.
According to Nepse, the secondary market carried out transaction amounting to Rs 10.27 billion in 2011-12 from the locations outside the valley. Similarly, the transaction worth Rs 7.53 billion was carried out in 2012-13, while it was Rs 15.35 billion by the end of December this fiscal.
The slow transaction from outside the valley has been attributed to the problems while investing from those locations. Besides, the problem seen in clearance for such transactions is also among the reasons, said experts.
“Although purchasing initial public offerings from those locations has been facilitated, the investors are unable to sell those stocks at their convenience,” said Stock Analyst Rabindra Bhattarai. He explained although there are a number of brokers operate their offices outside the valley, the investors are compelled to visit the Capital if they wish to sell the shares.
Despite having a large number of potential investors, those areas have failed to materialise the potential because of those problems, the experts said.
“Similarly, the district-based investors have to bear a huge transportation costs if they wish to sell their stocks in the valley.”
However, the stockbrokers on the other hand said that lack of public awareness on the outskirts has hindered the transaction from there. “Moreover, lengthy legal formalities also discourage the investors operating from those destinations,” said Anjan Raj Paudel, former president of the Nepal Stockbrokers Association.
The problems will be more critical if the investors’ signatures do not match with the original ones. “There is always a risk of losing documents while sending them out of station,” Paudel lamented.
Currently, the share transaction mainly takes place in major cities like Pokhara, Narayangadh, Dharan and Biratnagar. Referring to other cities with lots of potential, Paudel stressed the need to promote them along with simplifying the trading process to increase the volume of transactions there.
The experts have also stressed on operating the full-fledged central depository system to promote the share transaction from other cities. Although the CDS and Clearing was established some three years ago, it has failed to function in its fullest.
“Had the clearing system operated efficiently, the works like transfer of ownership and other documentations could have been carried out in short time,” said Bhattarai, blaming the Security Board of Nepal (Sebon) and Nepal Stocks Exchange for delay in clearance.
According to him, the share transaction can be done effectively from anywhere if the CDS and Clearing is implemented full-fledgedly.
Sebon’s spokesperson Niraj Giri also admitted that the tedious process for minimum share transaction in places outside the valley. He said that there was no option than the CDS for promoting the share transaction from those places.
According to him, the board has started a study on the capital of central depository members to operate the CDS. “We will hold further discussions after receiving a study report,” Giri added.
The stock trading from outside the valley barely accounts for 2 percent of the total turnover, with the transaction in those places registered with the Nepal Stock Exchange (Nepse) logging only Rs 663.1 million out of the country’s total of Rs 33.15 billion in the the last three years.
According to Nepse, the secondary market carried out transaction amounting to Rs 10.27 billion in 2011-12 from the locations outside the valley. Similarly, the transaction worth Rs 7.53 billion was carried out in 2012-13, while it was Rs 15.35 billion by the end of December this fiscal.
The slow transaction from outside the valley has been attributed to the problems while investing from those locations. Besides, the problem seen in clearance for such transactions is also among the reasons, said experts.
“Although purchasing initial public offerings from those locations has been facilitated, the investors are unable to sell those stocks at their convenience,” said Stock Analyst Rabindra Bhattarai. He explained although there are a number of brokers operate their offices outside the valley, the investors are compelled to visit the Capital if they wish to sell the shares.
Despite having a large number of potential investors, those areas have failed to materialise the potential because of those problems, the experts said.
“Similarly, the district-based investors have to bear a huge transportation costs if they wish to sell their stocks in the valley.”
However, the stockbrokers on the other hand said that lack of public awareness on the outskirts has hindered the transaction from there. “Moreover, lengthy legal formalities also discourage the investors operating from those destinations,” said Anjan Raj Paudel, former president of the Nepal Stockbrokers Association.
The problems will be more critical if the investors’ signatures do not match with the original ones. “There is always a risk of losing documents while sending them out of station,” Paudel lamented.
Currently, the share transaction mainly takes place in major cities like Pokhara, Narayangadh, Dharan and Biratnagar. Referring to other cities with lots of potential, Paudel stressed the need to promote them along with simplifying the trading process to increase the volume of transactions there.
The experts have also stressed on operating the full-fledged central depository system to promote the share transaction from other cities. Although the CDS and Clearing was established some three years ago, it has failed to function in its fullest.
“Had the clearing system operated efficiently, the works like transfer of ownership and other documentations could have been carried out in short time,” said Bhattarai, blaming the Security Board of Nepal (Sebon) and Nepal Stocks Exchange for delay in clearance.
According to him, the share transaction can be done effectively from anywhere if the CDS and Clearing is implemented full-fledgedly.
Sebon’s spokesperson Niraj Giri also admitted that the tedious process for minimum share transaction in places outside the valley. He said that there was no option than the CDS for promoting the share transaction from those places.
According to him, the board has started a study on the capital of central depository members to operate the CDS. “We will hold further discussions after receiving a study report,” Giri added.
Source: The Kathmandu Post
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