Management of Portfolio turns a damp squib
KATHMANDU, April 11:
Merchant bankers are not opting for portfolio management service in the wake of dismal capital market scenario.
“Due to overall unfavourable market condition, the portfolio management services do not seem to be popular among the merchant bankers,” said an official of Securities Board of Nepal (Sebon), the capital market regulator of Nepal.
Among the 14 merchant bankers, Sebon has granted license to operate as portfolio managers to twelve merchant bankers. However, only two are actively conducting the business. Beed Invest and Investment Management Merchant Banker are the only merchant bankers that are managing the funds of their clients.
“The maximum amount of business these two companies are handling do not exceed Rs 10 million, as the share market itself is not encouraging,” the official added.
The regulator of the Nepali capital market had brought in Portfolio Management Directive -2067 to supervise the emerging portfolio management companies in November 2010. The directive is supposed to manage and regularise the proceedings of the portfolio management companies. The directive has stated that the portfolio managers can take up clients which can invest Rs 300,000 on the minimum.
As for the smaller investors, mutual funds are more apt as a professionally-managed investment option.
According to the regulation, a portfolio manager is allowed to purchase and sell the securities on behalf of their clients and also settle funds. They will also be acting as consultants to their clients regarding the sale or purchase of securities. They have to inform their clients about important decisions taken by the companies the clients have invested in and keep a tab on dividends, rights shares and bonus shares.
“We are optimistic that the situation is soon going to improve as fundamentals of the listed companies are sound. Also, regulatory measures, soon to be started mutual funds, and Central Depository System (CDS) will also eventually perk up the market,” said Aditi Shrestha, chief of Research and Operation of Beed Invest.
She explained that speculative investors haver flooded the market during its bullish trend some years ago. The investors also reaped high returns effortlessly without the help of the professionals. “However, as market is in corrective mode, now is the time that investors need to reconsider their investment portfolios and seek the professional advice,” she added.
Moreover, portfolio management is supposed to facilitate the Non Resident Nepalis (NRN) interested in investing in the Nepali secondary market. This year’s budget has opened up the secondary market for NRNs as well. Since, NRNs managing the investment by themselves would be incomprehensible, portfolio managers can undertake activities regarding investment on behalf of their clients.
“The policy framework is not supportive of the foreign investment in Nepal as different regulations clash though the budget has opened up NRN investment. However, other regulations such as Foreign Investment and Technology Act also need to allow foreign investment in the market,” informed Shrestha.
Source: THT
Merchant bankers are not opting for portfolio management service in the wake of dismal capital market scenario.
“Due to overall unfavourable market condition, the portfolio management services do not seem to be popular among the merchant bankers,” said an official of Securities Board of Nepal (Sebon), the capital market regulator of Nepal.
Among the 14 merchant bankers, Sebon has granted license to operate as portfolio managers to twelve merchant bankers. However, only two are actively conducting the business. Beed Invest and Investment Management Merchant Banker are the only merchant bankers that are managing the funds of their clients.
“The maximum amount of business these two companies are handling do not exceed Rs 10 million, as the share market itself is not encouraging,” the official added.
The regulator of the Nepali capital market had brought in Portfolio Management Directive -2067 to supervise the emerging portfolio management companies in November 2010. The directive is supposed to manage and regularise the proceedings of the portfolio management companies. The directive has stated that the portfolio managers can take up clients which can invest Rs 300,000 on the minimum.
As for the smaller investors, mutual funds are more apt as a professionally-managed investment option.
According to the regulation, a portfolio manager is allowed to purchase and sell the securities on behalf of their clients and also settle funds. They will also be acting as consultants to their clients regarding the sale or purchase of securities. They have to inform their clients about important decisions taken by the companies the clients have invested in and keep a tab on dividends, rights shares and bonus shares.
“We are optimistic that the situation is soon going to improve as fundamentals of the listed companies are sound. Also, regulatory measures, soon to be started mutual funds, and Central Depository System (CDS) will also eventually perk up the market,” said Aditi Shrestha, chief of Research and Operation of Beed Invest.
She explained that speculative investors haver flooded the market during its bullish trend some years ago. The investors also reaped high returns effortlessly without the help of the professionals. “However, as market is in corrective mode, now is the time that investors need to reconsider their investment portfolios and seek the professional advice,” she added.
Moreover, portfolio management is supposed to facilitate the Non Resident Nepalis (NRN) interested in investing in the Nepali secondary market. This year’s budget has opened up the secondary market for NRNs as well. Since, NRNs managing the investment by themselves would be incomprehensible, portfolio managers can undertake activities regarding investment on behalf of their clients.
“The policy framework is not supportive of the foreign investment in Nepal as different regulations clash though the budget has opened up NRN investment. However, other regulations such as Foreign Investment and Technology Act also need to allow foreign investment in the market,” informed Shrestha.
Source: THT
