Money

Trades in Upper Tamakoshi shares cancelled after surge

The Nepal Stock Exchange on Monday cancelled trades in Upper Tamakoshi shares after prices rose more than 50 percent exceeding limits set by the bourse.

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Published at : January 15, 2019

Updated at : January 15, 2019 09:53

Kathmandu

The Nepal Stock Exchange on Monday cancelled trades in Upper Tamakoshi shares after prices rose more than 50 percent exceeding limits set by the bourse. As per Nepse rules, a circuit break is applied and trading is halted for the rest of the day if the price of a company’s shares increases or decreases by more than 10 percent.

Upper Tamakoshi shares were valued at Rs224 apiece when trading opened Monday. Investors rushed to purchase the company’s shares by posting purchase orders for 243,000 units. As a result, the price surged to Rs336 per unit.

Nepse spokesperson Murahari Parajuli said the bourse annulled the transaction of 259 units of the company’s shares after the abnormal rise in prices. According to him, a technical flaw at Nepse is the main reason behind the price surge.

Stockbrokers blamed Nepse for negligence by placing the wrong range for the company’s share price for the day. “It has affected a large number of investors at a time when they are having low confidence in the secondary market,” said a source. “Based on the opening price, the share price could go up to a maximum of Rs246.40 per unit.”

Nepse has been undergoing bear trend recently. While the index has been hovering around 1,100 points, average daily transactions have also dropped to as low as Rs250-300 million.

Nepse listed 105.9 million units of Upper Tamakoshi shares on Thursday, following which transactions went online from Sunday. On the first day of trading, Nepse had provided an opening range of Rs74.89 to Rs224.67 per unit.

Upper Tamakoshi is a 456 MW national pride project located in north central Nepal. It is being developed by a subsidiary of the Nepal Electricity Authority, the state-owned power utility. The hydropower company made its initial public offering of 15.89 million shares on November 1 which was oversubscribed fourfold.

Officials of the Securities Board of Nepal (Sebon) were skeptical about the functioning of the newly launched online trading platform. “As investors have been suffering from technical glitches since Nepse launched online trading on November 6, such new problems will further hit the trustworthiness of the system,” said a Sebon official who asked to be unnamed.

As per the source, Sebon suspects that similar problems have occurred with regard to stocks of other companies too. “The regulator will launch an investigation into the issue,” the source said.

Despite the suspension of trading in Upper Tamakoshi shares, the market on Monday surged 11.74 points to close at 1,186.80 points. Trading groups except commercial banks posted gains in their stock prices.