Sep 11, 2013

Collective investment boosts share market

Daily transaction in the share market has started to rise as the investors have started to invest forming groups. The average daily transaction was around Rs 100 million a day until some time back but the amount has increased to over Rs 150 million in the past few days. Analysts have attributed this improvement to entry of group investors in the market.

Bikash Shrestha of Banepa, Kavre, who has been doing routine job in Kathmandu, has started to invest in shares making a group of three individuals with collective investment of around Rs 1 million. He revealed that they have focused on primary shares after starting to invest some time back. Stating that they will wait for some time before staring to invest on secondary market, he said, “We have started this with an aim of investing some of our savings from petty jobs.” He has invested around Rs 400,000 on primary and secondary market.

The number of group investment has increased due to the lower risks involved and higher return. Rise in the number of group investors indicates that the share market is maturing. Investors claim that investing in groups also makes it easier to take risks due to sharing of knowledge about investment. Shiva Poudel of Gulmi has also invested around Rs 12 million making a group of four individuals. He said Rs 9 million has already been invested keeping Rs 3 million as reserve for liquidity management. The majority of investment of his group is long-term and the group is also getting good return after investing on hydropower companies, and banks and financial institutions. “It is easier to take decisions in group investment. The return is also better due to the boost of self-confidence while investing in groups,” he reasoned.

Lekh Nath Bhandari of Nawalparasi has also invested Rs 4 million in the share market in partnership with four friends. He said his group has only invested on shares of hydropower companies, insurance companies and commercial banks. “There is a lesser chance of loss as obtaining market-related information is easier for groups,” he stated. Share market analyst Rabindra Bhattarai said group investment has positive impact on the market due to risk minimization while investing in groups. “The market expands as the pressure of buyers in the market is greater due to group investment. There is also diversification of investment,” he reasoned. Stating that there can be relief in interest rate while investing by taking loans from banks and financial institutions, he said, “There is more capital while investing in groups. One can procure shares of strong companies due to that, and there is also potential of a higher return.” He claimed that there will not be negative impact of group investment as it will remain within legal limits although there is a chance of rise in betting in the market due to collective investment.    

Managing Director of Thrive Brokerage House Anjan Raj Poudel also stated that the number of persons investing in groups has increased and agreed that there is higher return from collective investment as more capital is invested. “Group investors have a major role in the rise in transaction amount in recent times. The trend of investing after much deliberation has increased due to them and it is, therefore, harder to manipulate the market now,” he said. 

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