Stockbrokers hit by market slump

KATHMANDU, May 26 -- A continuing slump in the stock market has left stockbrokers struggling to pay their bills. Asian Securities Limited of Bag Bazar, Kathmandu closed down its Birgunj branch which it had opened in 2010 after obtaining permission from the Nepal Stock Exchange (Nepse) to expand outside the capital.

According to Bijaya Kumar Khemka, chief of Asian Securities, opening branch offices only means enlarging the overheads. "At a time when the head offices of brokerage firms are having a hard time paying their office expenses, running a branch outside Kathmandu is out of the question," said Khemka.

In January 2010, Nepse had decided to allow stockbrokers to open branches outside the Kathmandu Valley where there is access to the internet through optical fibre. Brokers outside the capital operate through the remote work station platform provided by Nepse. However, services outside the valley are limited to placing buying and selling orders as they still have to rely on their head offices for clearance and settlement of transactions.

"With the prolonged downturn in the Nepse index, investors who entered the secondary market after we opened in their cities are currently regretting their decision," said Anjan Raj Poudel, president of the Stockbrokers Association of Nepal (SBAN). "So it is a difficult time for stockbrokers operating outside the Kathmandu Valley." Poudel is chief of Thrive Brokerage House which maintains a branch in Pokhara.

Stockbrokers have also blamed lack of awareness about the stock market among the general public outside Kathmandu for their reluctance to invest in shares. Poudel said that only four out of every 10 people coming to them had any knowledge about the capital market's fundamentals.

Nepse has issued permission to 11 stockbrokers to open branches in Biratnagar, Pokhara, Birgunj, Butwal and Narayangadh. Nepse had opened Nepalgunj to brokers too, but there were no takers.

Published by HT Syndication with permission from EKantipur.com.

For any query with respect to this article or any other content requirement, please contact Editor at htsyndication@hindustantimes.com