KATHMANDU: In response to claims that NEPSE employees were involved in insider trading, the Commission for the Investigation of Abuse of Authority (CIAA) raided the Nepal Stock Exchange (NEPSE) office recently. Monday's raid was carried out in response to reports that NEPSE staff members were trading stocks through friends and relatives and using private market data for their own benefit. A number of NEPSE personnel had their mobile phones and documents taken during the raid by the CIAA as part of their ongoing investigation.
Insider trading is a practice that taints the integrity of the market by divulging confidential knowledge about the stock market to gain unfair benefits. Pump-and-dump scams, insider trading, and circular trading were among the anomalies in the stock market that were detailed in a study released by the Ministry of Finance two years ago. All of these actions cause unfair business practices and market volatility.
The secondary market has recently shown a noteworthy upward trend; the index has risen by about 1,000 points and is almost at the record high of 3,198.60 points that it will achieve on August 18, 2021. Furthermore, turnover volumes on a daily basis have sometimes surpassed Rs 20 billion. This spike has raised concerns about market manipulation because it has been connected to unusually significant increases in the share prices of companies that have delivered subpar financial reports.
Despite having poor financial results, the share prices of several companies, including NRN Infrastructure, Hathway Investment Company, CDN Hydropower, and Nepal Finance Limited, have increased significantly. There are rumors of share cornering, a practice in which powerful investors amass substantial shares in order to manipulate pricing. Legislators and former finance minister Prakash Sharan Mahat have brought attention to these worries, speculating that a small number of powerful investors might be influencing stock prices.
The Parliamentary Finance Committee was unable to conduct a thorough investigation into these violations due to pressure from business and political groups. Experts claim that the recent surge in stock prices is not indicative of the underlying economic fundamentals, which has led to their condemnation. This calls into question the legitimacy of the current market practices and highlights the need for further monitoring and transparency.
