The bullish equities have attracted hordes of trading in the stock market, pushing average daily turnover up by more than double in past nine months.
The daily turnover at Nepal Stock Exchange (Nepse) stood at Rs 240.89 million by mid-April, according to Nepse statistics. In the same period last fiscal, it was around Rs 93.87 million.
The benchmark index that surged by 57 per cent complemented the inflated market turnover till the end of the third quarter. So far, the stock
exchange’s trading floor has witnessed trading worth Rs 40.47 billion in 168 trading days.
The average daily turnover of stock market had crossed Rs 200 million by the end of the first half of the fiscal year — mid-January — following the heady bull run post-November election. Weekly transactions since November crossed the Rs one billion mark, except for the one week ending in March 21, when the index had slid for the third consecutive week, dampening investor sentiment.
“It is natural that investors are attracted to trading shares when the market peaks and mostly during slumps sellers want to wait and watch if the prices will go up,” informed Narendra Raj Sijapati, president of Stock Brokers’ Association of Nepal.
Moreover, easy availability of margin financing has further pushed up the turnover. Financial institutions that are grappling with excess liquidity of about Rs 50 billion currently have found a safe bet in financing share traders.
“Buyers can obtain loans to purchase shares at 10 to 12 per cent interest rates, which has increased the capacity of the investors,” pointed out Sijapati.
Even class ‘A’ commercial banks that are not involved in margin financing, but only provide loans against collateral of shares, have also increased their exposure to these margin type loans. According to Nepal Rastra Bank’s statistics, total loans of this nature amounted to Rs 14 billion as of mid-February.
The stock market movement, which has become dependent on the financed funds, reacted alarmingly last month when the central bank governor signalled possible revision on margin type financing rules to prevent the formation of any asset bubble. The possible cap on easy financing prompted panic selling, thereby causing the index to slide for the next three weeks.
Moreover, increased trading limit of brokers has further given them the opportunity to carry out a larger number of transactions. Back in November, Nepse had increased the brokers’ trading limit to 50 times their guarantee fund at Nepse from 20 times.
source: the himalayan times,16 april 2014
LINK
The daily turnover at Nepal Stock Exchange (Nepse) stood at Rs 240.89 million by mid-April, according to Nepse statistics. In the same period last fiscal, it was around Rs 93.87 million.
The benchmark index that surged by 57 per cent complemented the inflated market turnover till the end of the third quarter. So far, the stock
exchange’s trading floor has witnessed trading worth Rs 40.47 billion in 168 trading days.
The average daily turnover of stock market had crossed Rs 200 million by the end of the first half of the fiscal year — mid-January — following the heady bull run post-November election. Weekly transactions since November crossed the Rs one billion mark, except for the one week ending in March 21, when the index had slid for the third consecutive week, dampening investor sentiment.
“It is natural that investors are attracted to trading shares when the market peaks and mostly during slumps sellers want to wait and watch if the prices will go up,” informed Narendra Raj Sijapati, president of Stock Brokers’ Association of Nepal.
Moreover, easy availability of margin financing has further pushed up the turnover. Financial institutions that are grappling with excess liquidity of about Rs 50 billion currently have found a safe bet in financing share traders.
“Buyers can obtain loans to purchase shares at 10 to 12 per cent interest rates, which has increased the capacity of the investors,” pointed out Sijapati.
Even class ‘A’ commercial banks that are not involved in margin financing, but only provide loans against collateral of shares, have also increased their exposure to these margin type loans. According to Nepal Rastra Bank’s statistics, total loans of this nature amounted to Rs 14 billion as of mid-February.
The stock market movement, which has become dependent on the financed funds, reacted alarmingly last month when the central bank governor signalled possible revision on margin type financing rules to prevent the formation of any asset bubble. The possible cap on easy financing prompted panic selling, thereby causing the index to slide for the next three weeks.
Moreover, increased trading limit of brokers has further given them the opportunity to carry out a larger number of transactions. Back in November, Nepse had increased the brokers’ trading limit to 50 times their guarantee fund at Nepse from 20 times.
source: the himalayan times,16 april 2014
LINK
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