SEBON getting weary of market surge, but investors, brokers remain defiant
ShareSansar, December 17:
The Securities Board of Nepal (SEBON), the regulator, is getting increasingly concerned about the sustained rally in the only stock market of the country post- election, but the investors as well as brokers are by and large still not yet ready for the correction.
“We don’t see sufficient reasons for this degree of optimism,” SEBON Spokesperson Niraj Giri told ShareSansar today. “We will wait and watch for a few more days. If the market does not go for correction shortly, we will have to tell the investors in clear terms that it’s high time to rethink about their strategy.”
Giri, however, clarified that the regulator was not in favor of directly intervening in the market or even issuing a public notice to caution or warn the stakeholders about the possible “bubble”.
SEBON’s reaction comes a day after the market was forced to close down yesterday after hitting 5 percent circuit breaker, owing to astounding turnover of more than Rs 33 crore in just around 45 minutes.
Earlier this week, the SEBON official had urged the investors to “pause and think” before leaping into the market, which is basically being fuelled by the hope of political stability in the country coupled by the central bank’s decision seek inputs from stakeholders to enforce Basel III from next month, besides surplus liquidity in the banking system.
“The political course ahead is still quite vague, and the central bank is only discussing the prospect of Basel III with the stakeholders. It has not yet enforced it,” asserts Giri. “Moreover, the surge in the price of the shares of the listed companies is not justified if we consider their fundamentally.”
On the other hand, the investors as well as the stock brokers remain defiant.
It may be noted here that the positive and prominent coverage of the bullish trend by the mainstream media organizations, especially the leading national dailies, has also buoyed the rally.
“We take the ongoing rally very naturally,” says Chairperson of Stock Brokers’ Association Narendra Sijapati. “Can’t you see that the rally is justified not just technically but fundamentally, too! Just think about the performance of the bonds and reverse repos issued by the central bank and then consider the first quarterly reports of most of the listed companies.”
Sijapati further argues that the market need not go for correction as of now – not until the benchmark index rises by around 200 points.
Though the general investors are in no mood to pause and think about the surge, some institutional investors such as fund managers who are keeping a close tab on the market are getting a bit cautious over the recent days.
For instance, Prabin Raman Parajuli, the Chief Executive Officer of Nabil Invest, which is one of the only two mutual fund managers in the country so far, says that there is a point of concern as an investor that “the growth is not justifiable fundamentally.
But he went on to add quickly that it may to be too early to label the growth as “worrying” since the volume of transactions, the weighted average price, have also been increasing.
