The fact is also attested by the figure of the transaction amount of the promoter shares in the Nepal Stock Exchange (NEPSE) till Sunday, January 5.
This week, a total of 567,000 units of promoter shares of 11companies were traded. Among them, Jyoti Bikas Bank logged the highest number of promote share trading of 108,000 units while Dev Bikas Bank is in the second position with 61,000 units of share transaction.
In the last week, out of the 20 highest traded stocks, 11 stocks were promoter shares while out of 10 biggest transactions, 7 were made on promoter shares.
The increase in trading of promoter shares can be attributed to unloading of right shares, comparatively low price, household registration and NRB directive, said Jyoti Dahal, advocate and stock analyzer. “The banks and financial institutions were required to increase their paid-up capital. Therefore, promoters were in a compulsion to purchase the right shares. The so purchased right shares are now being sold to manage liquidity,” said Dahal.
Promoter shares come with the cheap price compared to ordinary shares but the dividend yield is equal which makes the stock attractive to long term investors. Moreover, household registration and property transfer has also increased the transactions of promoter shares in the stock market.
As per NRB directive, a family cannot hold more than 15 percent of the total shares of a particular company. The mechanism has also increased the transfer in share ownership of promoter shares recently.
According to a broker, big investors are reducing their promoter share ownership in banks and financial institutions and diverting their investment in other sectors, which has increased the transactions in the market.
