KATHMANDU, Sept 5: Institutional investors including mutual funds and investment companies are found to be expanding their portfolios in the stock exchange market at a time when the share transactions at the Nepal Stock Exchange (NEPSE) has been continuously falling for the past few months.
According to NEPSE, investment of mutual funds in the share market stood at Rs 68.19 billion as of mid-August. The amount was 1.77 percent more compared to the investment of Rs 67.01 billion, as of mid-July.
A mutual fund is an organized team of experts that uses financial tools to collect money from many people. The experts of the team use this pool to buy shares, bonds, and other market assets on behalf of their customers.
Understanding Stock Market
The NEPSE records show that the total investment by mutual funds inclined by Rs 1.18 billion in one month. It has been found that many new funds were launched during the period, while there was an increase in the purchase of additional shares also by the old funds. “This reveals that the institutional investors are positive towards the market even when the stock market is constantly under pressure,” said a stockbroker on anonymity.
Percentage wise, Sanima Equity Fund-2 increased its investment in the secondary market purchase by the most, with a growth of 106.97 percent. The fund's share investment has increased from Rs 54 million to Rs 104 million in the review month. Citizens Balanced Scheme has also expanded its investment by 24.77 percent in a single month, taking its portfolio to over Rs 1.15 billion.
According to market analysts, as interest rates on bank deposits have declined, institutional investors have started transferring money to the stock market. Also, as the market has been slow for a long time, there has been a trend of large investors gradually accumulating shares.
Meanwhile, the attraction of individual and institutional investors towards margin loans is found to be increasing of late. As per the records with the Nepal Rastra Bank, margin loans from banks and financial institutions have reached Rs 166 billion by the end of the last fiscal year, an increase from Rs 140 billion in the previous year. The equity-backed loans of more than Rs 10 million alone have reached Rs 119 billion.
