Ten companies controlled 55 percent of the total stock market transaction in the last fiscal year.The Nepal Stock Exchange (Nepse) witnessed transaction worth Rs 22.14 billion in 2012-13. Everest Bank, Global IME and Standard Chartered Bank Nepal were among the top companies who shares were heavily traded. There are 230 companies listed on the Nepse.
Niranjan Phuyal, assistant manager at Nepse, said a few companies occupying a large share in trading volume would not help the market’s growth. “Domination of a few companies results in market volatility,” he said.
Given very few real sector companies (production-related industries) present in the secondary market, Phuyal highlighted the need for creating a conductive environment for the sector to come into the secondary market.
“Due to the current provision of listing shares, mainly at par value, has been the stumbling block to attract real sector companies in the secondary market,” he said, presenting a paper at a programme here on Sunday. He said income tax waiver and allowing issuing shares at prime rate could attract them. Phuyal also said the existing manual system of financial settlement has affected the transaction in secondary market. Although the government has installed the CDS and Clearing System to promote online settlement of financial transaction, it is yet to run full-fledged.
Speaking at the programme, Nepse General Manager Sitaram Thapaliya said they were introducing the online trading system within this fiscal year. He said the system will help facilitate people from distant places to invest in the stock market. “We have started the work and are in process of hiring a consultant for the purpose.”
According to Thapaliya, the online trading system will also feature an advance surveillance system that could help cross-check the audit of stock brokerage companies. “It could help control malpractice in the area,” he said.
Earlier, Nepse had started online trading through “remote work stations”. It had issued license to 11 stockbrokers to open branches in Biratnagar, Pokhara, Birgunj, Butwal and Narayangadh. However, many brokers discontinued their services due low business volume.
Thapaliya said they were also planning to upgrade the software and increase the number of work stations for promoting trading from places outside the valley. Besides, Nepse has also planned to improve the existing information system. Thapaliya said they would soon install electronic display boards displaying live stock trading at various places of the valley.
Babu Ram Shrestha, chairman of Security Board of Nepal, urged the government to introduce transaction tax instead of the existing capital gain tax.
“It will help increase investment and also the government revenue,” he added.
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