Monday, July 4, 2016

Nepse mulls extending trading hours

Nepal Stock Exchange (Nepse) has started preparation to extending share trading hours.
Currently, share trading is conducted for three hours – from 12 noon to 3 pm – five days a week, from Sunday to Thursday. However, Nepse has started homework for extending trading hour considering the growing demand in the market.
Issuing a press note, Nepse has also formally sought advice and suggestions from all stakeholders regarding extension of trading hours.
With increased demand and transaction in the stock market, Nepse officials say there is a room for extending the trading hour. Daily turnover, which used to over Rs 300 million a day, has climbed to over Rs 1 billion in recent weeks, thanks to technological advancement which has lured more investors into the secondary market.
On Monday alone, some 1.81 million units of shares of 140 companies worth Rs 1.55 billion were traded in the market. Despite this, the benchmark Nepse index shed 2.37 points to close the day's trading at 1,716.83 points. Market capitalisation also reached Rs 1,851.33 billion which is nearly 80 per cent of GDP.
Though, the Finance Ministry has been suspicious of the ever increasing transaction amount, and has also stepped up efforts to curb 'possible inflow' of illicit money into the secondary market, the market has been  bullish for the past one year.
Despite poor macroeconomic fundamentals, daily transaction of around Rs 1 billion everyday has raised regulator's brows, prompting regulators to caution investors against risks involved.
Nepse has however claimed that there is a need to extend trading hours as adoption of dematerialised forms of shares trading has attracted more investors to the market. "We want stakeholders to suggest to us pros and cons of the extension of trading hours,” Nepse added in the press note. The stock exchange has given stakeholders a week to send suggestions.
High demand for stocks, low bank interest rates and lack of other attractive investment opportunity in the country coupled with handsome return compared to other sectors is propelling the benchmark index to new highs almost every day. The other reason is attractive bonus and rights shares announced by most of the listed companies – especially banks and financial institutions and insurance companies – to meet the new paid-up capital requirement.
However, some say that the outdated software used by Nepse is hindering further growth and expansion of the country's only capital market.

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