NEPSE crosses 600 mark
Nepalnews.com, 7-Jul-2007
The Nepal Stock Exchange (Nepse) index made history in its 13-year-long existence when it crossed the 600 mark for the first time on Tuesday. Trade analysts attributed the rise to a continuous rise in share prices caused by the remarkable confidence shown by investors in stock trading.
The Nepse opened at 598.52 points Tuesday morning and ended at over 602 points, with shares of commercial banks and hydropower companies gaining.
According to the Himalayan Times, of the 40 leading scrips traded Tuesday, more than 90 percent of them gained in a range of Rs 1 to Rs 75 per share and only five companies were the losers among them.
The Nepse index has been soaring high for the last six weeks with investors making largely speculative buying amid rumors of persistent growth in share prices.
The Himalayan Times reported that the market has been overheated on speculation that the “financial institutions would soon announce positive annual financial results, as the book for this fiscal year is being closed in a week or so”.
“A rush of gullible and new investors is taking stock trading to a new high these days,” senior official at Nepse told the daily. He, however, warned that the current growth is “not justifiable in accordance with the country’s economic performance and actual financial health of the listed companies”
Terming the current Nepse as a ‘rumour-driven market’, the official also warned that the market could crash any day, if the existing speculation-dominated trend continued
Showing posts with label Stock Market. Show all posts
Showing posts with label Stock Market. Show all posts
Monday, September 03, 2007
Saturday, June 16, 2007
Stock brokers: Making hay while sun shines
Stock brokers: Making hay while sun shines
eKantipur.com, 9-Jun-2007
By KRISHNA REGMI
Stock brokers in Nepal are having a great time: their commission rate is one of the highest in the world and their profits are soaring. On top of that, their profits, in a way, are being protected by regulations that bars entry of new brokers in the ring.
As a result many brokers are raking in vast sums of money in commission. For example, during the last ten months of the current fiscal year, the highest-income generating broker earned on average, Rs 960,000 per month after taxes.
The commissions compiled by the Nepal Stock Exchange (NEPSE) show that the second highest earner made Rs 910,000 per month. The third, fourth, fifth and sixth highest earning brokers made Rs 870,000, Rs 740,000, Rs 630,000, and Rs 615,000 per month respectively.
NEPSE clients complain that the commission rate offered to brokers is too high, something that the NEPSE officials also agree with in private.
The commission rates at the regional stock markets also justify these complains. For instance, the Bombay Stock Exchange, India and Chittagong Stock Exchange, Bangladesh, have imposed upper ceilings of one percent for brokerage commission. However, in Nepal the lower ceiling is one percent and it can go up to 1.5 percent.
Fixed number of brokers for the last 11 years is another issue since it concentrates the incomes from stock commissions within a small group and keeps the interest rates high.
Notwithstanding the expanding size of the market, NEPSE has not added brokers for the last 11 years. At the time of its establishment in 1994, NEPSE had appointed 25 brokers. Two years later, it was expanded to 32. But the number declined later to 23, as some left the service and some were blacklisted by NEPSE.
In the beginning, there were only 60 companies; now 133 companies are listed for trading. Likewise, the market capitalization-- the value of listed shares-- shot up by over 21 times, to 148 billon rupees.
"Due to strong lobbying from the brokers, no concrete efforts were made in the past to allow the entry of new brokers," said a NEPSE official, preferring to remain unnamed.
But Rewat Bahadur Karki, general manager of NEPSE said the stock market has dispatched a letter to the Securities Board of Nepal (SEBON), a regulatory body, asking its permission to appoint 27 more brokers.
"However, there is no response as yet," he said, adding, "As soon as we get a nod, we will increase the number of brokers."
Deepak Raj Kafle, chairman of SEBON said the board is awaiting endorsement of the Brokers and Dealers Regulations that it has forwarded to the government to clear the way for expansion of the number of brokers.
Kafle also said absence of professional brokers was one of the reasons behind the erratic movement of share prices and the high rate of commissions.
Due to absence of competition coupled by weak regulations, the brokers are not rendering quality service. The recently prepared report by NEPSE points out that there is an immense need for brokers to professionalize their services, providing investors with an efficient and quality service. They have not maintained proper offices, and most do not have email addresses or fax machines, said the report.
eKantipur.com, 9-Jun-2007
By KRISHNA REGMI
Stock brokers in Nepal are having a great time: their commission rate is one of the highest in the world and their profits are soaring. On top of that, their profits, in a way, are being protected by regulations that bars entry of new brokers in the ring.
As a result many brokers are raking in vast sums of money in commission. For example, during the last ten months of the current fiscal year, the highest-income generating broker earned on average, Rs 960,000 per month after taxes.
The commissions compiled by the Nepal Stock Exchange (NEPSE) show that the second highest earner made Rs 910,000 per month. The third, fourth, fifth and sixth highest earning brokers made Rs 870,000, Rs 740,000, Rs 630,000, and Rs 615,000 per month respectively.
NEPSE clients complain that the commission rate offered to brokers is too high, something that the NEPSE officials also agree with in private.
The commission rates at the regional stock markets also justify these complains. For instance, the Bombay Stock Exchange, India and Chittagong Stock Exchange, Bangladesh, have imposed upper ceilings of one percent for brokerage commission. However, in Nepal the lower ceiling is one percent and it can go up to 1.5 percent.
Fixed number of brokers for the last 11 years is another issue since it concentrates the incomes from stock commissions within a small group and keeps the interest rates high.
Notwithstanding the expanding size of the market, NEPSE has not added brokers for the last 11 years. At the time of its establishment in 1994, NEPSE had appointed 25 brokers. Two years later, it was expanded to 32. But the number declined later to 23, as some left the service and some were blacklisted by NEPSE.
In the beginning, there were only 60 companies; now 133 companies are listed for trading. Likewise, the market capitalization-- the value of listed shares-- shot up by over 21 times, to 148 billon rupees.
"Due to strong lobbying from the brokers, no concrete efforts were made in the past to allow the entry of new brokers," said a NEPSE official, preferring to remain unnamed.
But Rewat Bahadur Karki, general manager of NEPSE said the stock market has dispatched a letter to the Securities Board of Nepal (SEBON), a regulatory body, asking its permission to appoint 27 more brokers.
"However, there is no response as yet," he said, adding, "As soon as we get a nod, we will increase the number of brokers."
Deepak Raj Kafle, chairman of SEBON said the board is awaiting endorsement of the Brokers and Dealers Regulations that it has forwarded to the government to clear the way for expansion of the number of brokers.
Kafle also said absence of professional brokers was one of the reasons behind the erratic movement of share prices and the high rate of commissions.
Due to absence of competition coupled by weak regulations, the brokers are not rendering quality service. The recently prepared report by NEPSE points out that there is an immense need for brokers to professionalize their services, providing investors with an efficient and quality service. They have not maintained proper offices, and most do not have email addresses or fax machines, said the report.
Saturday, June 09, 2007
NEPSE index hits all time high, Gains Rs 68b in a year
NEPSE index hits all time high, Gains Rs 68b in a year
eKantipur.com, 6-Jun-2007
BY KRISHNA REGMI
The stock market rose to a historic high Wednesday amid soaring speculative buying and investors' expectations that the economy will gain momentum with the ending of the 11-year old conflict.
The Nepal Stock Exchange (NEPSE) rose 5.82 points to close at 549.96 points at today's transactions, supported by growing share prices of commercial banks. The new record beats earlier all-time-high of 545.82 points registered in the fiscal year 2000/01.
The stock market today gained nearly two billion rupees in its market capitalization -- the value of listed shares. It reached over Rs 148.84 billion.
After Janaandolan-II which overthrew the King's direct rule 13 months ago, the market has continued to stay on an upward trajectory. Since then, the stock market has gained a staggering 200 points in its index. Likewise, market capitalization has expanded by over 68 billion rupees.
This means investors who bet their money in shares immediately after the installation of democratic government have already earned a return of 85 percent over what they invested.
“I earned more than Rs 100,000 from my petty investments in shares in a year,” said Mohan Rai, a small investor. But, he says he does not know why the equity market is doing so well.
“I put money in shares just because others are earning from it. And I am happy that share prices of Everest and Investment Bank, where I have invested, are on the rise,” he said.
In an attempt to quell the unnecessary rise, the stock market today halted the trading of the National Hydro Power shares, immediately after its share prices began to cross over 10 percent mark.
Nepal's stock market is dominated by commercial banks and movement of their share prices largely cause the market to go up and down. Of the listed 133 companies, 15 banks make up around 70 percent of the total market capitalization.
Ishwori Rimal, a broker, said that investor confidence has grown with the return of peace in the country. “In addition, there are still no other good investment opportunities. So, people are increasingly locking their money in equities,” he said.
He said the recent policy of the central bank which requires commercial banks to raise their paid-up capital to two billion rupees has heightened investors' expectations to get more bonus shares. This has driven share prices upward.
However, Radhesh Pant, president of Nepal Bankers' Association said that it was not a reasonable cause to justify the rise in share prices.
“I do not believe share prices should go up when paid-up capital of banks is raised. When the banks provide stock dividend, the value of company does not ramp up, it declines rather,” said Radhesh Pant, president of Nepal Bankers Association.
eKantipur.com, 6-Jun-2007
BY KRISHNA REGMI
The stock market rose to a historic high Wednesday amid soaring speculative buying and investors' expectations that the economy will gain momentum with the ending of the 11-year old conflict.
The Nepal Stock Exchange (NEPSE) rose 5.82 points to close at 549.96 points at today's transactions, supported by growing share prices of commercial banks. The new record beats earlier all-time-high of 545.82 points registered in the fiscal year 2000/01.
The stock market today gained nearly two billion rupees in its market capitalization -- the value of listed shares. It reached over Rs 148.84 billion.
After Janaandolan-II which overthrew the King's direct rule 13 months ago, the market has continued to stay on an upward trajectory. Since then, the stock market has gained a staggering 200 points in its index. Likewise, market capitalization has expanded by over 68 billion rupees.
This means investors who bet their money in shares immediately after the installation of democratic government have already earned a return of 85 percent over what they invested.
“I earned more than Rs 100,000 from my petty investments in shares in a year,” said Mohan Rai, a small investor. But, he says he does not know why the equity market is doing so well.
“I put money in shares just because others are earning from it. And I am happy that share prices of Everest and Investment Bank, where I have invested, are on the rise,” he said.
In an attempt to quell the unnecessary rise, the stock market today halted the trading of the National Hydro Power shares, immediately after its share prices began to cross over 10 percent mark.
Nepal's stock market is dominated by commercial banks and movement of their share prices largely cause the market to go up and down. Of the listed 133 companies, 15 banks make up around 70 percent of the total market capitalization.
Ishwori Rimal, a broker, said that investor confidence has grown with the return of peace in the country. “In addition, there are still no other good investment opportunities. So, people are increasingly locking their money in equities,” he said.
He said the recent policy of the central bank which requires commercial banks to raise their paid-up capital to two billion rupees has heightened investors' expectations to get more bonus shares. This has driven share prices upward.
However, Radhesh Pant, president of Nepal Bankers' Association said that it was not a reasonable cause to justify the rise in share prices.
“I do not believe share prices should go up when paid-up capital of banks is raised. When the banks provide stock dividend, the value of company does not ramp up, it declines rather,” said Radhesh Pant, president of Nepal Bankers Association.
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