LALITPUR, May 7, 2013
In a bid to generate interest of retail investors in the alternative investment instrument, the Securities Board of Nepal (Sebon) -- the securities market regulator -- has proposed exemption of capital gains tax (CGT) on investment of up to Rs 50,000 in mutual funds,
"We have already asked the Ministry of Finance for tax relaxation on investments of up to Rs 50,000 in mutual funds," Sebon Chairman Babu Ram Shrestha told a press conference held in Lalitpur on Monday.
"We hope the new provision will be introduced through annual budget of next fiscal year (which begins in mid-July)."
Mutual funds are investment vehicles that pools as little as Rs 1,000 from investors and invests in a range of securities like stocks and bonds, among others.
Sebon currently allows mutual funds to invest money raised from public in stocks, shares floated through IPO, treasury bills and bonds issued by Nepal Rastra Bank, government-guarantee bonds, bank deposits and money market instruments, among others.
"In a country like Nepal where state-owned market makers are not playing effective role in promoting the secondary market, mutual funds are emerging as viable vehicles that can give a boost to securities business," Shrestha said.
As of now five mutual funds -- Siddhartha, Nabil, Laxmi, NMB and NIB -- have hit the market. Of these, Siddhartha and Nabil have already launched their schemes.
Although the scheme launched by Siddhartha -- the first one since the promulgation of Mutual Fund Regulation -- was fully subscribed, it faced difficulties in pooling investors. However, the scheme launched by Nabil in March was oversubscribed by 3.92 times, indicating growing interest for investment vehicles other than stocks and bonds.
Although the investor interest in mutual fund is increasing, many complain service charges slapped by funds are on the higher side.
The Mutual Fund Regulation allows fund managers to charge a service fee of up to two percent of the net asset value of the fund.
"Yes, the fee is on a higher side and we hope the competition will bring it down," said Mukti N Shrestha, a Sebon deputy director. "But if the fee structure does not change even after launch of few more schemes, we will revise the provision."
Sebon Chairman Babu Ram Shrestha also echoed Mukti.
Investor interest in mutual funds is no doubt increasing. But investors should be careful about putting money in mutual funds as unlike investment in government bonds and debentures, a fixed return is not guaranteed in such schemes. This means whatever profit made by mutual funds will be distributed equally among investors, and in case of losses, investors should be ready to bear those equally as well.
Sebon refutes stock oversupply rumors
The Securities Board of Nepal (Sebon) has refuted claims that its latest regulation that allows conversion of additional 19 percent promoter shares of banking institutions into public shares through stockbrokers would flood the stock market with shares and cause their prices to take a dip.
"Since the central bank´s permission is required prior to selling over two percent of promoter shares, we don´t think shares of banks and financial institutions would flood the market," Sebon Chairman Babu Ram Shrestha told a press conference.
However, stockbrokers blame the change in provision for the latest fall in stock index from around 520 points about two weeks ago to 481.93 points on Monday.
As per the new Sebon provision launched some two weeks ago, banks and financial institutions can float up to 49 percent of promoter shares on the stock market, as against 30 percent in the past.
Although this provision of floating 49 percent of shares to the public was introduced in the past, promoters, previously, were allowed to offload these shares through offer documents, which cost couple of hundreds of thousands of rupees to produce.
The provision to sell promoter shares using offer documents is still intact. But in additional to this, promoters can now sell their shares through stockbrokers.
"But unless new investment avenues open up, promoters won´t offload their shares," Shrestha said, adding, "So far we have not seen huge number of shares being dumped and we probably won´t see such development taking place."
Source: Republica
In a bid to generate interest of retail investors in the alternative investment instrument, the Securities Board of Nepal (Sebon) -- the securities market regulator -- has proposed exemption of capital gains tax (CGT) on investment of up to Rs 50,000 in mutual funds,
"We have already asked the Ministry of Finance for tax relaxation on investments of up to Rs 50,000 in mutual funds," Sebon Chairman Babu Ram Shrestha told a press conference held in Lalitpur on Monday.
"We hope the new provision will be introduced through annual budget of next fiscal year (which begins in mid-July)."
Mutual funds are investment vehicles that pools as little as Rs 1,000 from investors and invests in a range of securities like stocks and bonds, among others.
Sebon currently allows mutual funds to invest money raised from public in stocks, shares floated through IPO, treasury bills and bonds issued by Nepal Rastra Bank, government-guarantee bonds, bank deposits and money market instruments, among others.
"In a country like Nepal where state-owned market makers are not playing effective role in promoting the secondary market, mutual funds are emerging as viable vehicles that can give a boost to securities business," Shrestha said.
As of now five mutual funds -- Siddhartha, Nabil, Laxmi, NMB and NIB -- have hit the market. Of these, Siddhartha and Nabil have already launched their schemes.
Although the scheme launched by Siddhartha -- the first one since the promulgation of Mutual Fund Regulation -- was fully subscribed, it faced difficulties in pooling investors. However, the scheme launched by Nabil in March was oversubscribed by 3.92 times, indicating growing interest for investment vehicles other than stocks and bonds.
Although the investor interest in mutual fund is increasing, many complain service charges slapped by funds are on the higher side.
The Mutual Fund Regulation allows fund managers to charge a service fee of up to two percent of the net asset value of the fund.
"Yes, the fee is on a higher side and we hope the competition will bring it down," said Mukti N Shrestha, a Sebon deputy director. "But if the fee structure does not change even after launch of few more schemes, we will revise the provision."
Sebon Chairman Babu Ram Shrestha also echoed Mukti.
Investor interest in mutual funds is no doubt increasing. But investors should be careful about putting money in mutual funds as unlike investment in government bonds and debentures, a fixed return is not guaranteed in such schemes. This means whatever profit made by mutual funds will be distributed equally among investors, and in case of losses, investors should be ready to bear those equally as well.
Sebon refutes stock oversupply rumors
The Securities Board of Nepal (Sebon) has refuted claims that its latest regulation that allows conversion of additional 19 percent promoter shares of banking institutions into public shares through stockbrokers would flood the stock market with shares and cause their prices to take a dip.
"Since the central bank´s permission is required prior to selling over two percent of promoter shares, we don´t think shares of banks and financial institutions would flood the market," Sebon Chairman Babu Ram Shrestha told a press conference.
However, stockbrokers blame the change in provision for the latest fall in stock index from around 520 points about two weeks ago to 481.93 points on Monday.
As per the new Sebon provision launched some two weeks ago, banks and financial institutions can float up to 49 percent of promoter shares on the stock market, as against 30 percent in the past.
Although this provision of floating 49 percent of shares to the public was introduced in the past, promoters, previously, were allowed to offload these shares through offer documents, which cost couple of hundreds of thousands of rupees to produce.
The provision to sell promoter shares using offer documents is still intact. But in additional to this, promoters can now sell their shares through stockbrokers.
"But unless new investment avenues open up, promoters won´t offload their shares," Shrestha said, adding, "So far we have not seen huge number of shares being dumped and we probably won´t see such development taking place."
Source: Republica
