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Stock market turnover dips amid new KYC rule

2018-05-20

Nepal Stock Exchange (Nepse) benchmark index inched up 1.48 points this week to close at 1,339.65 points on Thursday—the last trading day of the week. 

The market remained open for trading for only four days as Nepse remained closed on Sunday to mark Bhote Jatra, a holiday in the Kathmandu Valley. 

Most of the trading groups ended in the green zone this week. Insurance was the highest gainer with its sub-index jumping 16.15 points to close at 6,957.95 points. Hotels group followed the suit. Its sub-index rose 16.09 points and ended 1,982.01 points. 

Microfinance group rose 13.2 points to close at 1,733.54 points. Trading group registered a gain of 6.34 points to finish at 201.34 points. Sub-indices of Manufacturing and processing and Hydropower groups went up 5.33 points and 4.78 points, respectively, settling at 2,319.13 points and 1,655.74 points. 'Others' and Development Bank groups also inched up 1.62 points and 1.03 points, respectively, closing at 751.47 points and 1,545.22 points. Finance group, however, shed 4.46 points to close at 647.67 points. Banking, the heavyweight group, ended 0.62 point lower at 1,147.3 points. 

A total of 2.3 million units of shares of 176 companies worth Rs 1.82 billion were traded in the market this week through 14,026 transactions. The turnover is 45.96 percent lower than the last week. The drastic fall in the turnover is attributed to the recent rule brought by the Securities Board of Nepal about the requirement of know-your-customer (KYC) record update before any transaction that came into effect this week. 

Investors not updating their KYC form have been restricted from stock trading from this week. 

Earlier on March 9, Sebon had issued a circular to all stock brokerage firms, instructing them to update the KYC details from of their clients and keep the identity record of their clients as per the new format by May 14.

Observers attribute the fall in the daily turnover to the restriction on share trading for investors who are still to update their KYC form. “As many investors are yet to update their KYC details, they could not carry out trading in the market. So, the KYC is the major reason behind the decline in the turnover,” said a broker. 

The new KYC form prescribed by the Sebon is a more elaborated way of identifying a client. It includes more details of a client carrying out stock transaction. Among others, the new KYC form includes beneficiary owner identity number (BOID), bank account number, estimated annual income, finger print, profession and location map of the client.

Siddhartha Bank Ltd topped the list of companies in terms of turnover (Rs 70.18 million) and number of traded shares (211,000 units). Nepal Investment Bank Ltd topped the list of companies in terms of number of transactions (652).

Source: My Republica