Monday, January 14, 2019

Nepse cancels trading of Upper Tamakoshi shares

Nepal Stock Exchange (Nepse) has canceled share transactions of Upper Tamakoshi Hydropower Project traded above 10 per cent price increase – due to technical glitch – on the opening price of Rs 224 per unit today.
The price of Upper Tamakoshi shares rose more than 50 per cent exceeding limits set by the Nepse. According to the Nepse rules, it clamps individual circuit breaker, if share price of any listed company goes up or falls by more than 10 per cent in a single day. "The trading is also halted for the rest of the day that day in such case."
Upper Tamakoshi shares were closed at Rs 224 per unit yesterday, the first day of the trading of hydropower company's shares. Today morning it opened at Rs 224, and the investors rushed to purchase the company’s shares by posting purchase orders for 243,000 units. As a result, the price surged to Rs 336 per unit, which is around 50 per cent more than the opening price. The technical glitch in Nepse online trading system allowed trading of Upper Tamakoshi shares even after price increased by up to 50 per cent – in a single day – to Rs 336 per unit. Due to excessive surge in Upper Tamakoshi share price, the Nepse has also posted a double digit growth, which is yet another mistake by the Nepse online trading system.
Nepse has listed 105.9 million units of Upper Tamakoshi shares on Thursday, following which transactions went online from yesterday. Nepse had provided an opening range of Rs 74.89 to Rs 224.67 per unit for the opening day yesterday.
Nepse annulled the transaction of 259 units of the company’s shares after the abnormal rise in prices, informed spokesperson Murahari Parajuli. "A technical flaw at Nepse is the main reason behind the price surge," he said, adding that there was some problem at the Nepse's online trading. "The online system faced interface problem."
However, stockbrokers blamed Nepse for negligence by placing the wrong range for the company’s share price for the day. "Based on the opening price, the share price could go up to as high as Rs 246.40 per unit," the stockbrokers said, adding that the Nepse online system failed to check the maximum range limit of the stock price.
Though, Securities Board of Nepal (Sebon) – the capital market regulator – has been investing the issue, it is skeptical about the functioning of the newly launched online trading platform. The board also suspects similar problems with other companies's stocks too.
Though Nepse had launched online trading on November 6, it has been witnessing various problems repeatedly as a result the investors are losing confidence on the share market.
Nepse has been witnessing a bearish trend after the formation of KP Oli-led communist majority government. Recently, the Nepse index has been hovering around 1,100 points and the average daily transaction has also dipped to as low as Rs 250-Rs 300 million daily.
Likewise, Upper Tamakoshi Hydropower Project – a 456-MW national pride project located in the east of Kathmandu – is developed by a subsidiary of the Nepal Electricity Authority (NEA) replicating the Chilime Hydropower model that had floated shares to the public to mobilise the local resources for the development of the hydropower. Upper Tamakoshi Hydropower had issued public shares in three phases, for employees of promoter companies, affected villagers and general public. It had issued Rs 15.89 million units of initial public offering (IPO) on November 1, which was oversubscribed by fourfold. 

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