The investors have asked the government to allow the Non-Resident Nepalis (NRNs) to trade on the stock market. Submitting a memorandum to the Prime Minister, the stock investors asked the government to let the NRNs invest in the Nepal Stock Exchange (Nepse) that will help inject capital and increase demand of the stocks.
The Nepal Stock Exchange (Nepse) has lost more than 100 points in the last three months to 1,149.40 points from 1,280 points. Likewise, the daily turnover has sqeezed to Rs 150 million to Rs 200 million from Rs 300 million to Rs 350 million pulling the market capitalisation by around Rs 150 billion to Rs 1,435.32 billion.
The government has been talking about permitting investment by Non-Resident Nepalis in stocks for several years, but it has not happened yet due to lack of laws permitting them to repatriate profits from stock trading. As some NRNs may expect to take away profits from stock transactions in foreign currency, there is a need for a separate law to implement the provision.
Apart from Non-Resident Nepalis (NRNs) to trade on the stock market, they have also asked expanding remote work stations, resolving glitches in the online trading system and raise the margin loan ceiling.
They have asked to raise the ceiling to 80 per cent for margin loan, which will help propel the share market that has been witnessing a bearish trend in the recent months.
“We want the government to increase the loan-to-value ratio for margin loans to 80 per cent, which will help inject more money into the secondary market and boost demand for shares, reads a memorandum that the investors have submitted to the Prime Minister KP Sharma Oli today.
“Currently, investors can borrow up to 65 per cent of the value of the shares being used as collateral,” the memorandum further reads, adding that the central bank – last December – hiked the ratio to 65 per cent from 50 per cent, acting on a 58-point recommendation submitted by a task force of the Finance Ministry. “The banks, currently, issue margin loans by calculating the value of the shares based on an 180-day average price or the prevailing market price, whichever is lower.”
The brokerage firms have also started issuing margin loan from today. The government has permitted 21 out of the 50 brokerage companies to provide margin loans. The investors can borrow from the brokerage firms to buy the stocks.
Thus, the increased cash flow will help boost stock prices, the investors said but the central bank claimed that raising the loan-to-value ratio for margin loans will make the banks unable to manage risk.
The Nepal Stock Exchange (Nepse) has lost more than 100 points in the last three months to 1,149.40 points from 1,280 points. Likewise, the daily turnover has sqeezed to Rs 150 million to Rs 200 million from Rs 300 million to Rs 350 million pulling the market capitalisation by around Rs 150 billion to Rs 1,435.32 billion.
The government has been talking about permitting investment by Non-Resident Nepalis in stocks for several years, but it has not happened yet due to lack of laws permitting them to repatriate profits from stock trading. As some NRNs may expect to take away profits from stock transactions in foreign currency, there is a need for a separate law to implement the provision.
Apart from Non-Resident Nepalis (NRNs) to trade on the stock market, they have also asked expanding remote work stations, resolving glitches in the online trading system and raise the margin loan ceiling.
They have asked to raise the ceiling to 80 per cent for margin loan, which will help propel the share market that has been witnessing a bearish trend in the recent months.
“We want the government to increase the loan-to-value ratio for margin loans to 80 per cent, which will help inject more money into the secondary market and boost demand for shares, reads a memorandum that the investors have submitted to the Prime Minister KP Sharma Oli today.
“Currently, investors can borrow up to 65 per cent of the value of the shares being used as collateral,” the memorandum further reads, adding that the central bank – last December – hiked the ratio to 65 per cent from 50 per cent, acting on a 58-point recommendation submitted by a task force of the Finance Ministry. “The banks, currently, issue margin loans by calculating the value of the shares based on an 180-day average price or the prevailing market price, whichever is lower.”
The brokerage firms have also started issuing margin loan from today. The government has permitted 21 out of the 50 brokerage companies to provide margin loans. The investors can borrow from the brokerage firms to buy the stocks.
Thus, the increased cash flow will help boost stock prices, the investors said but the central bank claimed that raising the loan-to-value ratio for margin loans will make the banks unable to manage risk.
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