According to data compiled by Nepal Stock Exchange (Nepse) -- country´s sole security market, CGT worth Rs 42.23 million was mobilized during the first six months of 2010/11, significantly lower than Rs 194.92 million collected during the first half of 2009/10. The collection was Rs 477.16 million during the first half of 2008/09.[break]
Remarkable drop in share values of most of the listed companies in the secondary market over the last one year has pushed down CGT collection. The government collects 10 percent of the gains on transaction of shares as CGT.
“Most of the investors are making loss by selling shares at prices far lower than the buying prices. Whatever has been collected is through trading of shares which are purchased through Initial Public Offerings (IPOs) and promoter shares issuance," said Nanda Kishore Mundada, president of Nepal Stock Brokers´ Association.
Total worth of shares traded through stockbrokers was recorded at Rs 3.31 billion during the first six months of 2010/11. Total share transactions through stockbrokers had crossed Rs 12 billion during 2009/10. In fiscal year 2008/09, total worth of shares traded through stockbrokers had reached an all time high of Rs 22 billion. The government had collected Rs 1 billion as CGT during the period.
“Income of stockbrokers too has dropped by over 70 percent during the period as share values of the most of the companies has gone down by over 50 percent," Mundada added. He further informed that most of the investors, who had purchased shares from secondary market, have suffered loss.
Stockbrokers are allowed to levy 0.7-1 percent of the total transaction as commission and 25 percent of its goes to Nepse.
Nepse index -- an indicator of investors´ confidence in the secondary market, has dropped from 453.7 points (recorded on Aug 16, 2010) to 409.09 points on Monday. The benchmark index was recorded at 497.34 points on Feb 7, 2010.
Meanwhile, Nepse index dropped 4.67 points to close at 409.09 points on Monday. The drop in Nepse index was contributed by the loss in all trading groups except the Finance sub-index, thanks to political uncertainty in the country despite the appointment of a new prime minister after seven months of political deadlock.
“Optimism among investors couldn´t last long, as they are still unsure about the political course of the country despite the appointment of new prime minister,” Mundada added.
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