Sebon to probe ‘suspicious’ investment

KATHMANDU, July 17: Nepal Stock Exchange (Nepse) extended trading hours to four hours a day from Sunday, 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 Sunday, 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.

On Sunday -- 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 on Sunday morning’s opening. Market capitalization reached Rs 1,920.33 billion.

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 dematerialized 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.