Bijay Pandey

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Published On: September 6, 2017 11:32 AM NPT By: Bijay Pandey

Nitty-gritty of Nepali share market

Nitty-gritty of Nepali share market

When I visited my hometown after my graduation, I was surrounded by many of my friends and family who were curious to know about share market. As a scholar of MBA, many of my friends asked with me about the stock market.

They wanted to know how the share market operates. After listening to all their questions, I thought about simplifying difficult concepts of share market and make it accessible to those people who don’t have much knowledge on the topic. 

There are many queries like- What are the ways of buying the shares? Is it profitable and worth for putting the money onto it? Many people outside the Kathmandu Valley don’t know much about share market and they assume that share market is some kind of casino or gambling house. This misconception is the result of the fact that share market is centralized in Kathmandu, while people outside the capital city don’t know how to invest in share market. 

Though the trading of securities can now also be done from outside the valley, it is limited to some cities. It is essential to understand that share market is a market where securities are bought and sold. Securities can be bond, equity or preference share. The parties involved in this market are investors, brokers, banks, mutual fund, investment banks, insurance companies etc.

Share market in Nepal came into existence in 1976. Initially it was named Securities Exchange Center (SEC), but now we know it as NEPSE (Nepal Stock Exchange). SEBON (Securities Board of Nepal) is the apex body which acts as the market regulator for share market in Nepal.

Share market can be divided into primary and secondary markets. In primary market, any person willing to buy the share should have a D-MAT account in the bank. D-MAT account is the conversion of physical share into an electronic form. Before buying any shares or applying for it, it is compulsory to make a D-MAT account. SEBON has made Applications Supported by Blocked Amount (ASBA) mandatory for all public issues. 

ASBA is the system that will block the amount of the money from the investors’ bank account. For example, if you have a bank account in XYZ bank and want to buy the IPO or FPO shares of ABC bank, you have to fill the ASBA form. Under the ASBA, the amount of money will be blocked from your bank account. After the allotment of shares, they will be shown in your D-MAT account. And you are not allotted a share, your money will be refunded to your bank account.

In case of secondary market, investors that are willing to fulfill their liquidity needs mostly take help from the brokers. They have to go to a brokerage firm and get services by paying certain fees and commissions. For example, if one wants to buy or sell the shares of ABC bank, they should go to a broker and simply fill the form mentioning the ceiling price of the shares. The broker will place the order whenever the set price is met.

As per CBS’s (Central Bureau of Statistics) report of 2015/16, workers’ remittance to GDP ratio is 29.59 percent, which top remittance recipient economy in proportion to GDP in Asia and the Pacific in 2015. It seems we have money. Only the smarter ones are playing well with their money. So, Nepali people should try to reap the benefits by investing in share market. 

It’s the right time to make profitable investment in the lucrative share market. Lots of FPO and right issue share are about to come in the market to fulfill the minimum paid up capital requirement of banks and financial institutions. So, you can make your money count.


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