Growing number of investors in stock market: Risk or opportunity

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At a time when the country’s economy is reeling with the impact of the coronavirus, the stock market seems to have little or no impact at all.

According to the latest figure, revealed by the Central Bureau of Statistics, Nepal’s economic growth rate recorded negative growth of 1.99 percent in the last fiscal year; the domestic share market, however, seems to be taking advantage of the current situation.

The latest update published on the 4th of March provided by the Nepal Stock Exchange shows a huge surge in the number of active investors and users of the online trading system. According to the data, there is a total of 594,879 active clients in all the broker offices combined. The latest figure indicates that the broker companies have increased their number of clients significantly in a short period.

The latest report shows that only 37.41% of the active clients from all the broker companies use the online platform actively. According to CDS and Clearing Limited, more than three million Nepali have a Demat account. If all these investors came up with active participation in the coming days, the volume of participation would take the secondary market to an incredible level.

The Securities Board of Nepal, the regulator of the country’s stock market, as well as the Nepal Stock Exchange, the secondary market, have, however, warned investors to get involved in the stock market cautiously and to make investment decisions wisely.

Meanwhile, analysts have opined that the increase in the volume of investors creating opportunities for the public due to the easy provisions to receive loans from banks and financial institutions at a cheaper interest as they have limited sectors to invest in during the pandemic.

Undoubtedly, the introduction of the online platform at the share market has gradually increased the number of investors in the secondary market. However, analysts view that increasing awareness among the public should be carried out equally to attract more people towards the share market, ensuring their investment is secure.