Sebon tells Nepse to expedite process of issuing broker licence to banks

The capital market regulator has directed Nepal Stock Exchange (Nepse) and CDS and Clearing (CDSC) to expedite the process of market reform as suggested by a committee formed by the finance minister Dr Yuba Raj Khatiwada.
The Securities Board of Nepal (Sebon) has today directed the Nepse to conduct a study on issuing broker license to commercial banks, according to the report of the team of experts led by central bank deputy governor Shiva Raj Shrestha. The team had suggested that banks should be allowed to establish subsidiary brokerage firms. "Nepse and CDS should carry out a study to implement the recommendation,” a press note issued by the board today reads.
The central bank has last Wednesday already paved the way for commercial banks to set up their subsidiaries to work as stockbrokers. Three commercial banks – Sanima Bank, NIC Asia Bank and Citizens Bank International – have also applied to work as stockbrokers. But they also have to get a recommendation from the Nepse to apply for the stockbroker license with the Sebon. The entry of commercial banks to work as subsidiaries in the stock market as brokerage firms is expected to boost competition in the market.
Asking the Nepse to come up with measures to discourage activities that affect the capital market and lead to fluctuations in the stock index, the board has also instructed Nepse to revise the system of imposing circuit breaker in the market in line with international practices, to work toward establishing investors protection fund, to set up automated online system in the over-the-counter (OTC) market, and issue license to Employees Provident Fund, Citizens Investment Trust, Social Security Fund and securities businesspersons to work as market makers or dealers.
The board has also directed the stock exchange to provide a recommendation letter to the board for issuance of stockbroker license in line with the Securities Businessperson (Stock Broker, Dealer & Market Maker) Regulation, 2064.

Stock market suspends share transaction of 48 companies

Nepal Stock Exchange (Nepse) has suspended the share transaction of 48 listed companies – mostly hydropower firms, microfinance companies, development banks and hotels – as they have failed to pay annual renewal fees on time.
According to the rule, a listed company must pay its annual renewal fee – for regular transactions – within the first quarter after the completion of any fiscal year. The 48 listed companies failed to clear their dues within the first quarter that ended on October 17. The Nepse suspended their transaction today, as the share market opened after the festival holiday. The government has announced Dashain festival holiday from October 16 to October 20.
The listed companies need to pay the renewal fee as per their paid-up capital. According to the listing regulations, if a company has paid-up capital of up to Rs 10 million it must pay Rs 15,000 as annual renewal fee. Likewise, if a company has a paid-up capital between Rs 10 million and Rs 50 million, it need to pay Rs 25,000, and for a company with a paid-up capital of Rs 50 million to Rs 100 million, it has to pay Rs 35,000 annual renewal fee.
However, for a company with a paid-up capital of above Rs 100 million, the annual renewal fee has been fixed at Rs 50,000. Once the companies pay their renewal fees, their transaction will resume.
There are some 198 companies listed at the Nepse. 

Sebon plans to enforce separate regulation

The capital market regulator is going to enforce a separate regulation to take action against listed companies that fail to report on time. Many listed companies that have been disregarding Securities Board of Nepal's (Sebon) directive have been getting away with it at present.
According to the regulation, the listed companies are required to submit their unaudited quarterly financial reports to it within a month of the completion of the quarter. Likewise, organisations that have received operating licences from Sebon, including stockbrokers and merchant bankers, also need to submit their financial reports within the deadline. But of them has been disobeying the regulator.
According to the regulator, some 98 out of the 226 listed companies have not submitted their financial reports till date evenafter the deadline August 16.
Most of them are development banks. According to the Sebon, some 40 out of the 77 development banks have not submitted their financial reports. Likewise, some 20 out of the 34 finance companies have not submitted their reports, whereas some 15 companies related to manufacturing and processing, four companies in the trading group, seven commercial banks and six hydropower companies have failed to submit their reports.
However, Sebon has not taken any action against these companies due to lack of separate regulation to take action against such firms. According to the Securities Act 2006, companies violating the rule can be fined or their transactions suspended.
The listed companies have to submit their annual audited reports within five months from the start of the fiscal year. The deadline for Sebon’s licensed institutions is three months from the end of the previous fiscal year.

Nepse suspends trading of shares of 6 firms
KATHMANDU: The Nepal Stock Exchange (Nepse) on Monday suspended share trading of six stock broking companies – including Agrawal Securities, Ashutosh and Brokerage and Securities, Bhrikuti Stock, Creative Securities, Shree Krishna Securities and South Asian Bulls – for failing to pay the regulation fee to the Securities Board of Nepal (Sebon). According to capital market regulator, stock broking companies are required to pay 0.6 per cent of the total service charge they receive. 

Nepse suspends share trading

Nepal Stock Exchange (Nepse) suspended share trading for today.
The Nepse decided to suspend share trading – after brokerage firms requested it to – as the share brokers' back office system had some problem to implement the new brokerage commission.
According to Nepse, brokerage firms requested Nepse that they were yet to complete the process for billing transactions according to the reduced commission rate.
Though, the stock market analysts blame lack of coordination among stakeholders for the suspension of share trading, Nepse said that the trading will resume as usual from tomorrow.
The investors were kept in dark all day long citing 'technical glitches' and delay in updating the Broker Back Office System, or the billing system. However, the brokers attributed the suspension of share trading to delay in updating the reduced commission rate in their system. But the company that manages the software – Mandala System – said that the application was ready and there was no reason for halting share trading. "The brokers submitted the billing format only today after carrying out discussions with Sebon and the bourse,” said Mandala’s proprietor Biplav Man Singh. “If the billing format was presented to us on Friday, the trading would be possible today."
Amending the Securities Businessperson (Stock Broker, Securities Dealer and Market Maker) Regulations 2008, Securities Board of Nepal (Sebon) had directed the Nepse on July 20 (Wednesday) to implement the revised broker commission from Sunday.
But Nepse sent the official letter to the brokers asking for immediate implementation of the new regulation only on Friday.
Mandala – upon receiving the direction – had sought a week’s time to update the system. The broker community has asked the software management company to update the system by mobilising additional human resources to facilitate trading from Monday, according to a press release issued by the Stock Brokers’ Association Of Nepal. "The association and its members are committed to facilitating trading from Monday," it said, apologising to all the investors for the inconvenience caused because of technical difficulties.
The brokers today also held separate discussions with officials from Sebon and Nepse before submitting the new billing format to the Mandala. The brokers have also claimed that they have welcomed the move to reduce the commission rate.

Nepse begins four-hour trading from today

Nepal Stock Exchange (Nepse) extended trading hours to four hours a day from today, up from regular three-hour trading till last week.
In the early days, almost two decades ago, the share market used to see trading for only two hours a day – from 11 am to 1 pm. Daily trading period was increased to three hours -- from 12 noon to 3 pm later on, which has been extended to four hours from today, according to Rabindra Pradhan, a stock broker.
Nepse decided to extend trading hours following complaints from investors and stock brokers that the three-hour trading time was not sufficient. Trading days, however, have been kept unchanged.
Of late, the stock market has been seeing daily turnover in excess of Rs 1 billion due to lucrative returns that the secondary market offers compared to other investment avenues.
Few months ago, daily transaction hovered over Rs 300 million.
Today – the first day of the four-hour trading period – a total of 2.2 million units of shares of 136 companies worth Rs 1.36 billion were traded in the market. The benchmark Nepse index gained 27.59 points to close the day’s trading at 1,745.74 points from today morning’s opening. The market capitalisation reached Rs 1,920.33 billion at the end of the day.
Meanwhile, the Securities Board of Nepal (Sebon) – the capital market regulator – has asked the Nepse management to initiate reform measures along with extension in trading hours. “The extension of trading hours is appreciable,” Sebon said in a statement issued on Friday. “Nepse should also facilitate to process of bringing clearing bank and start massive reforms for sustainable growth of the share market,” it added.
Sebon, on Friday, also formed a committee to look into big investments in the share market on suspicion of illicit flow of money. The committee led by executive director of Supervision and Research Department of Sebon has directors of Legal Enforcement Division and Securities Businessperson Supervision Division along with representatives from Department of Money Laundering Investigation (DMLI), Central Investigation Bureau (CIB) of Nepal Police and experts in the field as members, according to Sebon Director Niraj Giri.
The committee has been asked to submit its report within a month.
Sebon formed the committee after the Ministry of Finance raised suspicion over the ever increasing transaction amount despite poor macroeconomic fundamentals.
Nepse, however, has claimed that rise in transaction is also due to adoption of dematerialised forms of shares trading, which has made trading easier, apart from lucrative returns. High demand for stocks, low bank interest rates and lack of other attractive investment opportunity in the country coupled with handsome returns compared to other sectors is not only propelling the benchmark index to new highs almost every day but also witnessing transaction of over Rs 1 billion ever day. The 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 is yet another key attraction pulling the investors to the market, according to share market analysts.

Nepse begins four-hour trading from today

Nepal Stock Exchange (Nepse) extended trading hours to four hours a day from today, up from regular three-hour trading till last week.
In the early days, almost two decades ago, the share market used to see trading for only two hours a day – from 11 am to 1 pm. Daily trading period was increased to three hours -- from 12 noon to 3 pm later on, which has been extended to four hours from today, according to Rabindra Pradhan, a stock broker.
Nepse decided to extend trading hours following complaints from investors and stock brokers that the three-hour trading time was not sufficient. Trading days, however, have been kept unchanged.
Of late, the stock market has been seeing daily turnover in excess of Rs 1 billion due to lucrative returns that the secondary market offers compared to other investment avenues.
Few months ago, daily transaction hovered over Rs 300 million.
Today – the first day of the four-hour trading period – a total of 2.2 million units of shares of 136 companies worth Rs 1.36 billion were traded in the market. The benchmark Nepse index gained 27.59 points to close the day’s trading at 1,745.74 points from today morning’s opening. The market capitalisation reached Rs 1,920.33 billion at the end of the day.
Meanwhile, the Securities Board of Nepal (Sebon) – the capital market regulator – has asked the Nepse management to initiate reform measures along with extension in trading hours. “The extension of trading hours is appreciable,” Sebon said in a statement issued on Friday. “Nepse should also facilitate to process of bringing clearing bank and start massive reforms for sustainable growth of the share market,” it added.
Sebon, on Friday, also formed a committee to look into big investments in the share market on suspicion of illicit flow of money. The committee led by executive director of Supervision and Research Department of Sebon has directors of Legal Enforcement Division and Securities Businessperson Supervision Division along with representatives from Department of Money Laundering Investigation (DMLI), Central Investigation Bureau (CIB) of Nepal Police and experts in the field as members, according to Sebon Director Niraj Giri.
The committee has been asked to submit its report within a month.
Sebon formed the committee after the Ministry of Finance raised suspicion over the ever increasing transaction amount despite poor macroeconomic fundamentals.
Nepse, however, has claimed that rise in transaction is also due to adoption of dematerialised forms of shares trading, which has made trading easier, apart from lucrative returns. High demand for stocks, low bank interest rates and lack of other attractive investment opportunity in the country coupled with handsome returns compared to other sectors is not only propelling the benchmark index to new highs almost every day but also witnessing transaction of over Rs 1 billion ever day. The 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 is yet another key attraction pulling the investors to the market, according to share market analysts.

Nepse orders postponement of Nepal Bangladesh Bank annual general meeting

Finally, Nepal Stock Exchange – the front line regulator – has directed Nepal Bangladesh Bank to postpone its annual general meeting (AGM) scheduled for March 11 due to the ongoing row regarding its share transfer.

The stock exchange has told the bank to wait for the Kathmandu District Court’s final ruling on share transfer row.

Though it is illegal and weakness of both regulators Nepse and sebon, the stock brokers have stopped trading the share of Nepal Bangladesh Bank and National Hydropower due to Nepse and Securities Board of Nepal's (Sebon) delay in solving the dispute.

Some 1,000 investors who bought around shares owned by Nirmal Pradhan and Shankar Shrestha around a year ago have not been issued share certificates yet as Pradhan and Shrestha are said to have sold some 220,000 units of NB Bank shares that they did not actually own and were only holding as collateral from the bank's promoter Laxmi Bahadur Shrestha. Pradhan and Shankar Shrestha are being accused of selling non-transferrable shares.

Some 145,000 unit shares of NB Bank’s shares are being held up in a blank transfer state, according to the sources.

"As the investors have been affected by the dispute and the eligibility of shareholders for the bank’s dividend is in question, the Nepse has ordered the bank to postpone the bank's 19th AGM," the Nepse statement read.

Nepal Bangladesh Bank has announced 7.9 per cent cash and 10 per cent stock dividend that is yet to be approved by the AGM.

Earlier, Laxmi Bahadur Shrestha – former NB Bank director – had pledged some 220,000 unit shares to get loan from Pradhan with a clause that barred him from selling the shares, it is said. "Later Pradhan and Shankar Shrestha pledged the shares at Narayani National Finance to obtain loan but the finance company auctioned off the shares when the borrowers could not repay the loans."

The shares were then traded at the stock exchange but Kathmandu District Court to annul the share transfers after Laxmi Bahadur lodged a case at the Court.

Stock market rally after Koirala elected prime minister

The stock market today reacted positively to the election of Nepali Congress president Sushil Koirala as the new prime minister of the country.

The Nepal Stock Exchange (Nepse) index crossed 800-point mark after almost two months on the election of democrat for the top job of the country.

The Nepse surged by 19.13 points or 2.44 per cent to close the market today at 803.13 points, after Koirala received overwhelming support to lead the new government.

As the uncertainty ended with the election of the prime minister, the index shot up by over three per cent – for the first time – attracting circuit breaker and and four per cent – for the second time – again attracting circuit breaker.

The market confidence also boosted due to liberal government in offing.

The investors started offloading to book the profit as the market started looking up. With the heavy buying and selling of stocks, the Nepse today witnessed some Rs 400.97 million worth transaction in a day.

Hydropower companies dominate stock market trading

The stock market has started showing its future trend as the Nepal Stock Exchange (Nepse) saw highest trading of three hydropower companies – out of total five listed hydropower companies – in a week.

Arun Valley Hydropower topped the chart of the highest traded companies with Rs 109.18 million, whereas newly listed Sanima Mai Hydropower followed with Rs 90.84 million and Chilime Hydropower saw Rs 48.71 million – making a total of Rs 248.74 million worth share trading of the hydropower companies alone, in a week's trading last week.

The manufacturing companies used to dominate the stock market in its earlier days, whereas the banks and financial institutions have dominance in the market currently.

The market witnessed transaction of Rs 1.21 billion – against a week ago's Rs 1.11 billion – whereas the hydropower companies' contributed to above a quarter of the total transactions. There are only five hydropower companies at the Nepse against around 200 banks and finance companies that are still thought to be lucrative stocks. But 2.5M-W Ridi Hydropower is going to be the sixth hydropower to be listed at the Nepse – soon – to be followed by 456-MW Upper Tamakoshi that will ensure more dominance of the hydel companies.
Currently, the country is energy stressed and witnesses some 84 hours of power cut in a week inviting potential investors to exploit hydropower resources.

The stock market last week surged by 10.6 points as the Nepse closed at 786.52 points on Thursday from the Sunday morning's opening of 775.92 points.

Sanima Mai Hydro stocks start trading

Sanima Mai Hydropower has debuted its stock trading at Rs 324 for an unit today.

The fifth hydropower company had listed its 10,530,000 units of stocks at the secondary market a week ago. However, the market saw only 10 units of Sanima Mai Hydro's stocks trading today. The hydel project promoted by the NRNs has a book value of Rs 108 and according to the rule, the debut price could be three times the book value.

The five hydropower companies have listed a total of 55,075,622 units of stocks at Rs 100 per unit at the Nepal Stock Exchange (Nepse).

The hydropower sub group has gained 56.17 points, though the overall Nepse index could not gain and lost 1.56 points to close the market at 783.91 points today.

The Nepse has lost but it has witnessed trading of some 125 companies with a turnover of Rs 350.45 million as 807,040 units of stocks.

Will CA Election help boost economy?

Nepalis are braving bombs, bandh and the poll-opposer 33-parties led by CPN-Maoist Mohan Baidhya today and voting for a peaceful, democratic, free and prosperous future.

Dismissing various political pundits' prediction of low voter turnout, the people – mostly the youths – exercised their rights today across the country for the second Constituent Assembly (CA) election that is crucial not only to n complete the drafting of democratic Constitution but also kick start the stalled economic movement.

Though the first and the historic CA election in 2008 was able to throw away the over two centuries old Monarchy, it could not chart out the course of a developed and prosperous Nepal due to UCPN-Maoist's ideological and economic policy confusion.

The UCPN-Maoist that had an overwhelming victory in 2008 failed the people as it could not get out of war era mentality and tried to backtrack the liberal economic policy, used its labour wing to disturb the investment-friendly environment and disappointed the private sector and foreign investors.

They neither could deliver the Constitution through Constituent Assembly that took almost seven decades to materialise. However, the political parties – in the last six years – completed the peace process and settled the thorny issue of Maoist combatants.

Despite the poll boycott by some of the parties, the peaceful election of CA will certainly give the economy a boost. "The interim election government is going to handover a robust economy to the elected government," according to the finance minister Shankar Prasad Koirala.

But the transition has taken its toll in the market as it has been witnessing  price hike and shortage of essential commodities. "The government has to concentrated fully on to hold CA election and could not regularly monitor the market," accepted Koirala, who is also commerce and supplies minister.

The election also has its own impact on economy as the political parties and the government spending is expected to exceed Rs 40 billion. The over supply of money will fuel the inflationary pressure on economy.

"The over flow of money in the market will challenge the government and central bank that have targeted to contain inflation at eight per cent," said former chief adviser to the Finance Ministry Keshav Acharya.

Most of the expenses in election will go to unproductive sectors, he said, adding that that will increase the inflationary pressure. "But the election will also give new hope to the economy also."

Formation of new elected government could help boost the economy like in 2008 post CA election. Likewise, the Nepal Stock Exchange (Nepse) index – that is considered as a mirror of economy – also closed four year high of over 600 points – on Thursday – after 2008.