400 listed companies by 2016 - SEC Chairman

Antonym wrote:

seek wrote:

Antonym wrote:400 listed companies would ensure adequate supply. What needs to be addressed is the inadequate demand.

Is not the inadequate supply is the reason for inadequate demand?. As per the comment of one of foreign fund manager inadequate supply is reason for them to stay away from the market

It's a chicken and egg situation, actually; which should come first: more supply or more demand? If there is more supply, will foreign funds allocate more money to SL, to absorb the supply? Or will there be an over-supply, resulting in lower prices? I don't know.

The basic problem is one of liquidity or trading volumes. If a x% increase in supply brings in a >x% increase in demand, great! If not, not good.

As a 1st step, I would recommend a reduction in brokerage and related charges, so that traders are encouraged to execute larger and more frequent transactions. Make share trading a 'high volume, low margin' business like the currency markets. That would address the foreign funds' primary grouse - inadequate volumes being traded...

Is not that low-volume is a result of less number of shares available in the market? Other than JKH, RICH, COMB, PLC and few others, is there any company in CSE that large foreign fund to enter and exist? Reduction of broker charges will help for retailers and will encourage more short-term trading. Yes, volume will be increase and shares will change hand with in same set of people but number of shares or options available in the floor will not be increased.

seek wrote:
Is not that low-volume is a result of less number of shares available in the market? Other than JKH, RICH, COMB, PLC and few others, is there any company in CSE that large foreign fund to enter and exist?

Less number of shares is probably one reason for low volume. If so, we need more large companies to list (increase in supply), but we also need more money to come in (increase in demand).

seek wrote:
Reduction of broker charges will help for retailers and will encourage more short-term trading. Yes, volume will be increase and shares will change hand with in same set of people but number of shares or options available in the floor will not be increased.

The objective is to increase liquidity. If broker charges are reduced, it would be easier to make profits. Therefore, trading volumes (i.e. liquidity) would increase... And, it would be the same set of people plus many more.

Large volumes do not come from retailers - this applies for overseas exchanges as well.

Volumes come from trading houses that take large positions and are willing to buy & sell. Trading houses need capital and that capital needs to come from somewhere.

Trading houses also allow retailers to borrow stock and hence short sell.

It is the trading houses that allow foreign funds to buy/sell easily.

Antonym wrote:

As a 1st step, I would recommend a reduction in brokerage and related charges, so that traders are encouraged to execute larger and more frequent transactions. Make share trading a 'high volume, low margin' business like the currency markets. That would address the foreign funds' primary grouse - inadequate volumes being traded...

Whatever the level brokerage and related charges are reduced, Share Trading will not be a “high volume –low margin ‘ business like currency market. Simply because currency transactions are “leveraged ‘transactions. These days, some Brokerage houses offer leverage even upto 1:500 times. That is , if your investment is $ 1,000 ,you are permitted to trade upto $ 500,000 ( are entitled to entire gains/losses ). That’s why it looks like high volume business. That transaction model cannot be applicable to Share Trading.

knockknobbler wrote:

Antonym wrote:

As a 1st step, I would recommend a reduction in brokerage and related charges, so that traders are encouraged to execute larger and more frequent transactions. Make share trading a 'high volume, low margin' business like the currency markets. That would address the foreign funds' primary grouse - inadequate volumes being traded...

Whatever the level brokerage and related charges are reduced, Share Trading will not be a “high volume –low margin ‘ business like currency market. Simply because currency transactions are “leveraged ‘transactions. These days, some Brokerage houses offer leverage even upto 1:500 times. That is , if your investment is $ 1,000 ,you are permitted to trade upto $ 500,000 ( are entitled to entire gains/losses ). That’s why it looks like high volume business. That transaction model cannot be applicable to Share Trading.

There is empirical evidence to suggest that by reducing transaction costs (even without leveraging), there would be a more-than-commensurate increase in share trading volumes.
For intra-day trades, the NSE of India charges a brokerage of 0.1% on the buy side and 0.1% on the sell side. That's the kind of reduction I would like to see - gradually, of course... Contrary to your belief, share trading is already a high volume, low margin (HVLM) business in mature markets... not as HVLM as the currency markets, I admit.

Whitebull wrote:(Actually my concern is not development of stock market but regarding that long term tax holidays.)
I do not think it justifies the 3-5year 100% tax holidays for companies.And all most all these methods give some relief in short term but in long term disadvantages are well over the advantages.It is like treating the symptoms without treating the cause.

Regarding the long term tax breaks.

A 50% tax holiday for 3 years does not look attractive to bring hardcore large scale family oriented businesses to the market. As Jiggy and other members explained, we need to increase the size of this market. Companies such David Pieris, MAS, Brandix could easily fix into top 20 companies @ CSE (if they like).

Retailers alone cannot buy shares. Again I don’t think new company stakes will be only sold to foreign funds. No one acquires company stakes from a market to lose money.

Unless a genuine reason (already planned to come to the market), I bet only a hand full of companies will accept this 50% tax break for 3 years. Personally if I have a considerable size company I would not go to the market for sake of this 50% tax break.

50% tax break for at least 5-7 years would another option. Then these family own companies has to stay in the market for longer period. Indirectly this will give benefits to government as they can dig deeper & monitor the activities of these companies.

Perhaps, they should reduce number of companies from current 287 to 150 ! select the best and say goodbye to the rest. get the owners of laggard companies to delist by paying the minority shareholders the NAV or the highest traded price for the year, whichever is higher. To increase liquidity, give incentives for companies to issue bonus shares or splits. This way, we become a niche quality frontier market.The foreign funds are anyway focussing on quality and not quantity. they are buying JKH beacuse of the quality and the liquidity. Just because their are 400 companies will not attract them unless their is quality on offer. A reduction in companies to say 150 will also benefit the retailers i.e. you and me ! poor retailers will not get stuck with poor quality shares perhaps. as a start, they should delist about 30 finance companies. in some of them not even one share has been traded. With fewer option of shares to choose from, a bull run will surely start !
Pls take above with a pinch of salt !

UKboy wrote:

Whitebull wrote:(Actually my concern is not development of stock market but regarding that long term tax holidays.)
I do not think it justifies the 3-5year 100% tax holidays for companies.And all most all these methods give some relief in short term but in long term disadvantages are well over the advantages.It is like treating the symptoms without treating the cause.

Regarding the long term tax breaks.

A 50% tax holiday for 3 years does not look attractive to bring hardcore large scale family oriented businesses to the market. As Jiggy and other members explained, we need to increase the size of this market. Companies such David Pieris, MAS, Brandix could easily fix into top 20 companies @ CSE (if they like).

Retailers alone cannot buy shares. Again I don’t think new company stakes will be only sold to foreign funds. No one acquires company stakes from a market to lose money.

Unless a genuine reason (already planned to come to the market), I bet only a hand full of companies will accept this 50% tax break for 3 years. Personally if I have a considerable size company I would not go to the market for sake of this 50% tax break.

50% tax break for at least 5-7 years would another option. Then these family own companies has to stay in the market for longer period. Indirectly this will give benefits to government as they can dig deeper & monitor the activities of these companies.

Well we have different ideas.What I think is listing in stock exchange itself give significant advantages to the companies.Ofcourse they have to be more transparent.On the otherhand there are ways and means to bypass all those transparencies in country like us.So I believe when listed in stock exchange here companies could have advantages in two ways....genuine advantages and corrupted systemic advantages.Therefore no need to give another long term advantage.

The Alchemist wrote:Perhaps, they should reduce number of companies from current 287 to 150 ! select the best and say goodbye to the rest. get the owners of laggard companies to delist by paying the minority shareholders the NAV or the highest traded price for the year, whichever is higher. To increase liquidity, give incentives for companies to issue bonus shares or splits. This way, we become a niche quality frontier market.The foreign funds are anyway focussing on quality and not quantity. they are buying JKH beacuse of the quality and the liquidity. Just because their are 400 companies will not attract them unless their is quality on offer. A reduction in companies to say 150 will also benefit the retailers i.e. you and me ! poor retailers will not get stuck with poor quality shares perhaps. as a start, they should delist about 30 finance companies. in some of them not even one share has been traded. With fewer option of shares to choose from, a bull run will surely start !
Pls take above with a pinch of salt !

Important different option....

introduce short selling to make money in down trend

Today brew down 119 single share trade and index turns red and its continuing.Illiquidity at its best.

Another not much talked about factor that has lead to the "manipulation" of the ASPI index is the amalgamation of the odd lot board with the main board. classic case of let sleeping dogs lie or if it aint broken - dont fix it ! You see today this impact in BREW. only 1 share traded -down Rs 120 for an 7 point negative impact on ASPI. CTC with a Market Cap of nearly Rs 139 Billion is down Rs 20 on turnover of Rs 625,000 for a negative impact of nearly 10 points on the ASPI.
If they wanted to amalgamate the odd lot board with the main board, real time impact i.e. the volume weighted average market price should reflect on the index. Now it happens only once the market closes and then they adjust the Index. This distorts real time data for market participants and maybe adding to the sentiment.

The Alchemist wrote:Another not much talked about factor that has lead to the "manipulation" of the ASPI index is the amalgamation of the odd lot board with the main board. classic case of let sleeping dogs lie or if it aint broken - dont fix it ! You see today this impact in BREW. only 1 share traded -down Rs 120 for an 7 point negative impact on ASPI. CTC with a Market Cap of nearly Rs 139 Billion is down Rs 20 on turnover of Rs 625,000 for a negative impact of nearly 10 points on the ASPI.
If they wanted to amalgamate the odd lot board with the main board, real time impact i.e. the volume weighted average market price should reflect on the index. Now it happens only once the market closes and then they adjust the Index. This distorts real time data for market participants and maybe adding to the sentiment.

Some improvement at the end.Came up from 25 points down to 11 points down.

Tomorrow it could be GSF. last traded 650 and buyer is around 500.

prabath wrote:

The Alchemist wrote:Another not much talked about factor that has lead to the "manipulation" of the ASPI index is the amalgamation of the odd lot board with the main board. classic case of let sleeping dogs lie or if it aint broken - dont fix it ! You see today this impact in BREW. only 1 share traded -down Rs 120 for an 7 point negative impact on ASPI. CTC with a Market Cap of nearly Rs 139 Billion is down Rs 20 on turnover of Rs 625,000 for a negative impact of nearly 10 points on the ASPI.
If they wanted to amalgamate the odd lot board with the main board, real time impact i.e. the volume weighted average market price should reflect on the index. Now it happens only once the market closes and then they adjust the Index. This distorts real time data for market participants and maybe adding to the sentiment.

Some improvement at the end.Came up from 25 points down to 11 points down.

Finally 20.8 points down

What was the reason for merging odd lots with the main board?