Kathmandu, January 5:

Experts hailed the central bank’s recent directive of banning margin lending, though temporarily for a month, and urged to clean up capital market for its sustained development. “Volatility of capital market must be checked,” they said.

Addressing an interaction on Capital market development and role of economic journalist, finance Minister Dr Ram Sharan Mahat, said too much money and few shares has fuelled the market that needs to be monitored and regulated efficiently and effectively. “Speculative investment will not only harm capital market but also hurt financial institutions,” he said adding that the government is trying to cleanse stock market to make it a real barometer of economy.

“Nepal Rastra Bank, suspecting that margin lending has pushed share prices

up, stopped the margin lending,” he said. The volatile capital market has become a great threat to the financial institutions recently.

“Its government’s duty to protect investors and financial institutions, both,”

Bimal Wagle, joint secretary at the Finance Ministry said. “For the development of secondary market, Nepse will be privatised within this year,” he said, adding that the Trust Act is also

in offing for Central Depository System (CDS), an effective instrument for the

secondary market.

“Its SEBON’s duty to protect investors not gamblers,” said Dr Chiranjivi Nepal, chairman of Securities Board of Nepal (SEBON), adding that the board is serious about the recent

development.

He blamed poor corporate governance in real sector that has kept them out of the capital market. “Those sectors, except financial institutions, could not flare in the capital market due to lack of transparency and good governance,” he added. “Investment should not be speculators’ sport.”

SEBON’s directors Niraj Giri and Parista N Poudel, and deputy directors Nabaraj Adhikari, Binaya Dev Acharya, Muktinath Acharya, Dhruba Timilsina, Mekh Bahadur Thapa and Bijaya Ghimire, past president of Society of Economic Journalist (SEJON) presented the papers on various topics related to the primary market, its supervision and regulation, secondary market’s monitoring and development of the capital market.

Standoff to continue:

KATHMANDU: This whole week, Nepse did not see any trading at its floor as a group of investors forcefully obstructed the trading protesting against the central bank’s recent decision of halting the margin lending for a month. Nepal Rastra Bank, the regulatory authority of the financial institutions, has directed financial institutions to stop margin lending against the shares fearing that could lead to collapse of some of the financial institutions that have lent against shares, heavily. However, Rewat Bahadur Karki, general manager of the Nepal Stock Exchange (Nepse) requested agitating investors to let the trading take place to check, if it affects the secondary market. But a group of investors is not in favour of trading. “We will not let the trading happen at the floor until the NRB revokes its decision,” states a press release of the Investors Association. The investors have also threatened brokers not to be involved in any trading. “But the brokers had posted 57 orders — 49 for buying and eight selling,” states a press note from the Nepse. Brokers have, issuing a press release, requested the investors to let the trading happen. Meanwhile, this week, 2,00,000-unit ordinary shares of Biratlaxmi Development Bank; 5,00,000-unit ordinary shares of Nepal Express Finance Ltd; 15,00,000-unit rights shares of Lumbini Bank; 20,12,815-unit bon-us shares of Nepal Investment Bank and 44,662-unit of bonus shares are also listed at the Nepse. — HNS