Nepse sees whopping decline

Nepse sees whopping decline
Nepalnews, 12-Sep-09

Not surprisingly, the books closure of financial institutions dragged the entire Nepal Stock Exchange (Nepse) down by 47.48 points to 614.78 points last week.

Commercial banks, development banks, financial institutions and hydropower companies - key market propellers - nosedived this week, pulling down Nepse by a shocking 55.61 points to 614.79 points from Sunday morning’s opening of 660.40 points.
All the groups except manufacturing group saw a decline in their indices

The hydropower companies group declined by 27.16 points followed by development banks’ group with 25.28 points. The groups representing finance as well as insurance companies saw a decline of 17.98 points each. The group categorized as others witnessed a decline of 11.75 points followed by trading group with 10.46 points.

The sensitive index that measures the transactions of the ‘A’ class companies saw a decline of 16.43 points. There are 78 ‘A’ class companies listed in the Nepse. Nabil Bank topped in terms of turnover with Rs 67.83 million, Standard Finance Company in terms of number of shares traded with 1,35,000-unit shares changing hands and Citizens Bank International topped in terms of number of transactions.

Meanwhile, the transaction amount increased by 40.08 percent to Rs 483.89 million against last week’s fall of 32.63 percent.

The float index - calculated on the basis of real transactions - also slid down by 5.14 points to drop to 58.53 points from Sunday morning’s opening of 63.67 points.

NEPSE pulls out of weeklong dive

NEPSE pulls out of weeklong dive
eKantipur, 12-Aug-09

The Nepal Stock Exchange (NEPSE) Wednesday surged 26.98 points after being in the doldrums all last week. The sensitive index too soared 10.12 points. This is the first time in 2009 that the sensitive index has increased by double digits.

According to stock analysts, the secondary market bounced back after the news of Standard Chartered Bank’s proposing cash dividend of Rs 50 per share and 2:1 bonus share. Common investors are hoping other commercial banks will also give the same kind of return to them, as financial institutions have started to release their fourth quarterly reports, with show good profit.

All the sub-indices on NEPSE saw an increment on Wednesday. The banking sector pushed up the index after it grew by a huge margin of 45.57 points followed by the hydropower sector which rose 11.18 points and the development bank sector which increased 9.63 points. Likewise, the finance sector increased by 2.14 points and the insurance sector was up 1.46 points.

The share market witnessed a total turnover of Rs. 137.846 million with 180,602 shares being traded. Shares of 63 companies changed hands on NEPSE.

There were 20 commercial banks that traded on the trading floor on Wednesday. All the banks on the index today witnessed an increase. The highest gainer among the commercial banks was Standard Chartered Bank which rose by 542 points.

Similarly, among the 10 development banks whose shares were traded on NEPSE on Wednesday, seven saw an increase in their share prices while only two of them lost. Ace Development Bank was the highest gainer among development banks with a 27 point increment. Triveni Bikas Bank lost 7 points.

Likewise among the 25 finance companies on NEPSE, Nepal Aawas Bikas Beeta Co. was the highest gainer with an increase of 20 points in its share price. Lumbini Finance lost 31 points. Among the 25 finance companies, 13 of them witnessed an increase while eight went down.

The top five winners on NEPSE were Standard Chartered Bank and Nabil Bank with a 9.99 percent rise each followed by KIST Bank, Everest Bank and NIC Bank.

Similarly, the top five losers on Wednesday were Lumbini Finance which fell by 2.72 percent followed by Lord Buddha Financial Institution, Kathmandu Finance, Nepal Share Markets and Lumbini General Insurance.

Standard Chartered Bank topped the chart in terms of turnover with Rs. 22.309 million

Stock prices down 35% in eight months

myrepublica.com, 14-Apr-09
MILAN MANI SHARMA

If the drop in the prices of stocks indicates anything, people who invested on shares in the secondary market have lost 35 percent of their money over the past eight months.

Nepal Stock Exchange (NEPSE) figures show, the floating index -- which portrays the picture of stock prices -- has presently dropped to 64.58 points from 100 of eight months ago due to protracted gloom in the stock market.

And a sharp rise in the supply of shares as against lowered purchases has dragged the value of even the most sought-after companies’ shares down to half over this period. A NEPSE official said only the people who bet their money on companies that issued rights and bonus shraes have been saved and the rest have lost as much as 65 percent.

What this means is people who invested on shares of companies and banks like Standard Chartered Bank and Nabil Bank that issued bonus and rights shares got value for their money.

But those who put their money on the stocks of companies like the Bank of Kathmandu (BoK) and Nepal Investment Bank (NIB) have suffered losses, for the share price of BOK has dropped to Rs 1,450 from Rs 2,649 and NIB’s to 1,170 from Rs 3,281 during the period.

“Mainly those who bought the shares at bloated prices earlier this fiscal year have lost the money,” said Nanda Kishore Mundada, president of Nepal Stock Brokers’ Association.

Stock brokers mainly blame the lack of clear vision of the government, dramatic changes in policy, enforcement of Voluntary Declaration of Income Scheme (VDIS) and rumors of government digging out income sources of stock transactions for the present deserted outlook of the stock market.

“Insensible and irresponsible statements by the finance minister against the stock market and its players also left a grave impact,” said Mundada.

As a result of the gloom, stock market has performed dismally over the first nine months of the fiscal year.

For instance, turnover of stock trading has presently dropped to Rs 34 million a day, whereas it had averaged Rs 100 million a day last fiscal year. And NEPSE, which initially projected transactions to cross over Rs 34 billion and after six months revised the projection down to Rs 25 billion, says that it could miss even this revised target.

Breakdown of NEPSE trading shows, the market was vibrant even till the first five months of the fiscal year that ended mid-December 2008. As people rushed to buy shares of some banks and financial institutions anticipating bonus and right shares, 14.1 million units of shares were traded at Rs 12.30 billion during that period.

NEPSE index too had swollen to 1175.38 points in August 2008.

In the later four months from mid-December 2008 to mid-April 2009, however, only 7.9 million units of shares were transacted and the turnover totaled Rs 4.63 billion.

Apart from the people, the government is also set to miss its collection target from the market. In the budget statement, the government had projected to collect Rs 1.50 billion in capital gain tax alone while raising the tax to 15 percent from 10 percent. But with nine months gone the collection is not even Rs 900 million.

And given the transaction trend, revenue collection will remain short of target, a NEPSE official said.

But stock analysts noted that the current decline in prices has also created a new opportunity for investors. “If prudently invested, the people could reap sound returns on the shares when share prices rise in the early quarter of the next fiscal year,” said Mundada.

Public shares issued increases

Public shares issued increases
ekantipur, 11-Jan-09
PRITHVI MAN SHRESTHA

Despite sluggishness in the share market, with the stock index sharply declinging from 1,100 points to around 700 points over the last four months, the number of financial institutions seeking share issuance approval has continuously risen.

As many as 16 banks and financial institutions received approval from the Security Board of Nepal (SEBON) to issue shares worth Rs 4.2 billion during the first six months of current fiscal year. The SEBON granted approval for 19 companies to issue share worth Rs. 2.71 billion during the same period last year.

According to SEBON, 30 other companies are already on the waiting list to receive approval for floating shares worth Rs. 7.05 billion.

SEBON director Niraj Giri said that the companies were not hesitating to issue shares despite the recent downturn in the country's stock market because most of the applicants were banks and financial institutions.

"As people trust in banks, the financial sector remains strong, and we expect people to continue investing in their shares," he said.

All the companies receiving approval so far this year were financial institutions, and most that received such approval last year were also financial institutions.

Amongst the banks, Siddharth Bank received approval on January 7 of this year to issue Initial Public Offerings (IPOs) worth Rs. 300 million. Three other new banks, Citizen, Prime and Sunrise, as well as Vibor Development Bank, are also awaiting SEBON approval to issue IPOs worth Rs. 1.22 billion.

"The response to their IPOs will also show the confidence of investors' in the share market," Giri said.

The number and amount of shares issued increased last year, and the trend is continuing this year too.

According to SEBON, as many as 64 companies issued shares worth Rs. 10.66 billion last year. Likewise, 46 companies are expected to issue shares worth Rs. 11 billion this year.

Giri said that number of shares issued increased as the Nepal Rastra Bank (NRB) directed all financial institutions to increase their capital base. "So, they have been issuing various types of shares to increase their capital base," he added.

As per the NRB directive, the banks are required to increase their paid up capital to Rs. 2 billion, development banks to Rs. 640 million and finance companies to Rs. 200 million by 2011, for new banks, and 2014 for older banks. The directives are being met, proved by the fact that most of the older financial institutions have been issuing right and debenture shares and new ones IPOs.

Among the 16 financial institutions receiving approval for share issuance this year, 13 are currently going to issue right shares.

As many as 49 companies received approval for issuing right shares, 18 companies for IPOs, five for debenture and 12 for bonus shares in the last fiscal year. Most of them are financial institutions.

President of Nepal Bankers' Association, Radhesh Panta, holds the view that people trust in the banking sector because of its transparency, which was the main reason behind large investment in the share market recently.

"The growth in the number of financial institutions and their compulsion to go public, as per the NRB regulation, is fueling the investment in shares," he said.

But, former SEBON chairman Dr. Chiranjeevi Nepal claimed that the easier provisions made through five regulations introduced during his tenure in the office mainly contributed to the high rise in the issuance of shares last year.

Shares to flood capital market

Shares to flood capital market
ArthaExpress, 4-May-08

Do save – buying shares is the best way to invest your hard earned money. And, there are some 10 financial companies – one commercial bank, four development banks and five finance companies – on the pipeline to float pubic shares worth about half-a-billion rupees.

Of them, the Securities Board of Nepal (Sebon) has already given green signal to eight — three development banks and five finance companies — to float initial public offering (IPO).

“We are studying the applications of Global Bank and Pashupati Development Bank,” said Binaya Dev Acharya, deputy director at the Corporate Finance Division of Sebon.

Global Bank has assigned NIDC Capital markets Ltd as its issue manager. Apart from these ten financial institutions, two more commercial banks are also preparing to float Rs 300 million worth shares to public, each.

Prime Commercial Bank has already assigned Citizen Investment Trust as its sales and issue manager and the Bank of Asia has picked Nepal Merchant Banking and Finance Company as issue manager.

According to the new regulation of Nepal Rastra Bank, the financial companies must issue 30 per cent minimum shares to the public. Lately, the central bank has also fixed the paid up capital for the finance companies (at Rs 200 million), development banks (Rs 640 million) and commercial banks (Rs 2 billion).

The central bank’s regulation requires already established financial companies to increase their paid up capital by the end of fiscal year 2012-13.

However, the financial institutions are floating the shares according to the current structure of their paid up capital. The financial institutions play a dominent role in our capital market as it has more than 80 per cent weightage in the total listed companies.

New IPOs

• Global Bank is floating 30,00,000-unit worth 300 million rupees
• Pashupati Development Bank is floating 8,00,000 -unit of shares worth Rs 8,00,000,00
• Subekchhkya Development Bank is floating 1,20,000-unit shares worth Rs 1,20,00,000,
• Triveni Development Bank is floating 1,50,000-unit shares worth Rs 1,50,000,00
• Clean Energy Development Bank is floating 9,60,000-unit shares worth Rs 9,60,000,00.
• Kaski Finance Company is floating 2,00,000-unit of shares worth Rs 2,00,000,00
• Shikhar Finance Company is floating 2,00,000-unit of shares worth Rs 2,00,000,00
• Sagarmatha Merchant Banking and Finance is floating 2,00,000-unit shares worth Rs 2,00,000,00
• Reliable Investment Finance Company is floating 2,47,500-unit shares worth Rs 2,47,500,00
• Lord Buddha Finance Company is floating 2,25,000-unit shares worth Rs 2,25,000,00

Fourth day of Nepse closure : Central bank firm on its decision

Fourth day of Nepse closure : Central bank firm on its decision
ArthaExpress.com, 3-Jan-08

Nepal Rastra Bank (NRB) is bringing a package — within the first week of Magh — to deal with current capital market dispute. “The central bank is categorically going through the books of financial institutions on margin lending and its repercussions on financial institutions and capital market,” a senior official at the central bank, said adding that the new package will minimise the risks of financial institutions and stabilise capital market. However, the NRB refused to revoke its decision of temporary ban on margin lending.

Today, the fourth consecutive day, also Nepse did not witness any trading because of a group of investors, who opposed the trading at the Nepse floor. Earlier, brokers and investors had agreed, in the morning, to open the floor for two hours today. “Stock exchange should not be closed,” Navaraj Pokhrel, president of Nepal Brokers Association, said adding that brokers are against the trading halt.

“NRB might have done mistake but the investors should not halt trading,” he added. But a group of investors, fearing a huge fall in shares prices, forced the brokers not to trade from Monday.

Meanwhile, speaking at an interaction at the Reporters’ Club today, Dr Chiranjivi Nepal, chairman of Securities Board of Nepal (SEBON), the regulatory body of capital market said that globally capital market is directed by three principles: transparency, fair play and reduction of systemic risk. “But Nepali capital market lacks all these parameters,” he said challenging the investors to open the market and prove that margin lending is not fuelling the market.

Rewat Bahadur Karki, general manager of Nepal Stock Exchange (Nepse), the sole secondary market, also requested the opposing investors to trade and test the market.

Narayan Poudel, director at the regulation department of NRB, the regulatory authority of the financial institutions, said that policies continue to change. “However, the central bank is trying to minimize the risk of financial institutions,” he said adding that the central bank can not let financial institutions risk depositors money.

On the occasion, representatives of investors said that they will not let transaction take place untill NRB revokes its decision.

NRB makes a move against speculative investment

NRB makes a move against speculative investment
The Himalayan Times, 28-Dec-07
Kuber Chalise

The Nepal Rastra Bank (NRB) today suspended margin lending on shares and loan renewal, apparently to curb speculative investment.

The directive, to be enforced from tomorrow, directs category A, B, and C financial institutions — commercial banks, development banks and finance companies respectively — to stop margin lending and renewal of loans against shares.

“The actual impact will be on the capital market but it will also hit those financial institutions whose portfolio of lending against shares is big,” said Radhesh Pant, managing director of the Bank of Kathmandu and president of the Nepal Bankers’ Association.

“The directive is aimed at stopping manipulation and insulating the stock market,” said National Planning Commission member Dr Posh Raj Pandey. “If the market is not corrected, more stringent measures will be used.”

Chiranjivi Nepal, chairman of the Securities Board of Nepal, also agreed: “The directive is for market correction. The capital market is said to be fuelled by margin lending on shares that the banks provide subscribers against their shares.”

Since the financial institutions are more vulnerable due to margin lending, this directive could save them from a crisis and stabilise the capital market, Nepal said.

“Nepse needs to be cut down to size. If the share market crashes after reaching a sky high, not only will the investors find themselves on the streets but it will also hit the financial institutions and the national economy ,” he said.

“The directive may bring some correction,” said stockbroker Rabindra Pradhan. The capital market, dominated by financial institutions, has recently posted a whopping growth and margin lending is attributed to Nepse’s “abnormal rise”. But some challenge this directive.

“NRB cannot issue any such directive as it is against the Company Act,” said capital market analyst Rabindra Bhattarai. “Banks can lend on collateral, be it shares or anything.”

NRB’s Legal Department Director Dharmaraj Sapkota dismissed Bhattarai’s argument.
“The Nepal Rastra Bank Act-2058, clause 79, gives the central bank special powers to issue such directives in order to manage the monetary market,” he said.

NEPSE opens online share trading

NEPSE opens online share trading
eKantipur.com, 16-Oct-07

Nepal Stock Exchange (NEPSE) has granted permission to five stock brokers to conduct share trading online, paving the way for the new era of online transactions in the Nepali stock market.

Under the new arrangement, stock brokers can now place shares for selling and ordering shares for procurement using a wide area networking system, according to NEPSE.

Malla and Malla Stock Broking (Broker Number 11), Nepal Stock House (No. 14), Nepal Investment and Securities Trading (No. 19), Shree Krishna Securities (No. 28) and Premier Securities (No. 32) are the broker companies allowed to carry out online trading.

"These brokers have been included in NEPSE's wide area networking (WAN) system," says a press release from NEPSE.

It has also said that NEPSE would include the remaining 17 brokers in the wide area network to enable them to conduct online transactions within a month.

NEPSE also announced that it would convert its system from local area networking to WAN in the next six months.

For payment settlement, NEPSE is also using separate software it got from Comdaq Group of Britain.

"Use of the software will enable sellers to receive payment instantly," says the release. Transacting brokers, on the other hand, would have to submit the transaction amount within two working days.

Likewise, the broker selling the shares would have to handover the share document and ownership certificates within three days of transactions. While brokers would follow a self-audit system for the online business, they would have to secure approval of NEPSE to complete the overall deals.

Stock trading at Nepse halted as market registers a steep fall

Stock trading at Nepse halted as market registers a steep fall
Nepalnews.com, 9-Oct-07

Four days after registering an impressive growth, the stock market recorded a steep fall Monday, proving right the fears of trade analysts that the overheated market may not be sustainable.

The Nepse index fell by a whooping 25.46 points to close at 873.92 points Monday, after which Nepse intervened and for the first time in its history, suspended trading for the day.

Reports quoted Nepse officials as saying that the decline was mainly due to the central bank’s latest directives, which cleared the way for increased supply of shares for trading and also tightened margin lending–loans against stocks.

Following the crash, the Nepse’s market capitalization decreased to Rs 269.1 billion from Rs 277 billion.

Referring to the cause behind the decline, officials said Nepal Rastra Bank (NRB) on Sunday directed banks and financial institutions to sell cross-holding shares—the stock that they owned in another bank or financial institutions.

SEBON gears up to protect investors’ rights

SEBON gears up to protect investors’ rights
ArthaExpress, 6-Oct-07

Securities Board of Nepal (SEBON) was established on June 7, 1993 as an apex regulating body of securities markets. Though its major responsibility is to regulate stock market under the Securities Exchange Act-2006, the board has been passive in the past. Current Bull Run in the Nepse floor has, however, forced the board to come to the forefront to protect investors’ interest.

But Nepali investors are very ill-equipped with information of the companies on which they are betting their hard-earned money. “For a real growth of stock market, investors must be strong and have enough information,” says Dr Chiranjibi Nepal, chairman of Securities Board of Nepal (SEBON), adding that stock market is a mirror that reflects real economic situation of a country. “But the current Bull Run in Nepse and Nepal’s economic growth do not go hand in hand,” he adds.

SEBON also has a responsibility of supervising and monitoring the functions and activities of stock exchange. Not only that SEBON can inspect whether or not stock exchange is executing its functions and their activities are in accordance with the Securities Act -2006. It can supervise and monitor the functions and activities of securities-dealers as well.

There are around 0.8 million investors and the board has to safeguard their interest. “SEBON is committed to investors’ rights,” Nepal adds. “To protect investors’ right, we are planning awareness programmes. Regular and easy information dissimination and capital market strengthening are on our cards,” informs the newly appointed chief of the regulatory body. SEBON can make necessary arrangements to prevent inside trading or any other offences relating to transactions in securities in order to protect the interest of investors in securities.

As there are only 23 brokers, currently and the market has grown exponentially in the last one year, most of the brokers are accused of not entertaining small investors. “Proposal to increase the number of brokers is at the final stage. Once finance ministry approves the proposal, we will invite applications for the new brokers, most probably before Dashain holiday,” he says adding that the Brokers’ code of conduct — to regularise the transactions and make the brokers more efficient — is also on the final stage.

“SEBON is gearing up with all its resources to help the capital market grow soundly.” Nepal says.

Weekly share update : Nepse continues to rise

Weekly share update : Nepse continues to rise
ArthaExpress, 6-Oct-07

The Bull Run continued at Nepal Stock Exchange (Nepse) this week, too, as the share trading posted yet another record by closing at an all time high of 899.42 points from the opening 885.50 points on Sunday.

As the rush of gullible investors continued at the country’s sole secondary market, the Nepse index this week posted a growth of 13.92 points.

Market watchers claim that repeated warnings and pre-cautionary notice of Securities Board of Nepal (SEBON) has slowed down the Bull Run in the market, however it is still picking up marginally.

“Increasing political uncertainty has also not affected share market giving strong ground for accusation of foul play and inside trading,” market pundits say adding that stock market worldwide is very sensitive but our stock market is behaving ‘abnormally’.

Given the size of our economy and almost no real sectors’ involvement in the Nepse mean growth doesnot reflect national economy. And the experts recently are questioning the source of investment also.

The weekly turnover for this week stands at Rs 747.1 million with 9,35,119 unit shares having been traded through 2230 transactions. Out of the total trading, the companies under ‘A’ category comprised of 53.48 per cent or Rs 399.6 million.

As usual financial institutions including commercial banks and development banks and insurance companies were the market leaders, while the firms under hydropower and hotel group became the loser this week.

The commercial banks group, which is the largest scrip by volume at the Nepse floor, posted a growth of 10.20 points this week. The group’s index climbed up to 1005.72 points from the opening 995.52 points.

The development banks group posted a whopping growth of 117.43 points and closed at 869.66 points. The finance and insurance groups, too, managed growth as their indices closed at 593.17 points and 698.16 points respectively. Earlier, the finance group began its trading at 550.06 points, while the insurance group started at 690.65 points.

The hydropower group, which has been one of the aggressive performers earlier, however, lost 16.58 points this week to close at 1373.75 points. The group began its trading at 1390.33 points.

Lumbini Bank Ltd outshone all others in terms of monetary value for the week, as the bank’s shares worth Rs 243.74 million exchanged hands at the floor and it also stood first in terms of the largest number of shares as its 4,20,300 unit shares traded during the week. Nepal Bangladesh Bank saw the highest number of transactions at 169, this week.

Among the top 10 performers for the week nine are commercial banks and one is a development bank. The floor remained open for five days.

According to the monthly data, in the month of Bhadra, Nabil Bank Ltd outshone all others in terms of market capitalisation. Nabil Bank’s market capitalisation has touched Rs 29.45 billion, which is the record in itself. Similarly, Standard Chartered Bank comes second in terms of market capitalisation with Rs 28.96 billion in Bhadra.

Weekly Share Update : Investors’ education need of hour

Weekly Share Update : Investors’ education need of hour
ArthaExpress, 29-Sep-2007

Rising barometer of (Nepal Stock Exchange) Nepse, the sole secondary market, has send the cold wave to experts. Nepse index gained 30.49 points this week to post 878.35 points at the close of the week. In the recent months, the index has posted almost 400 points growth, which has no rationale as national economy has not expanded. The investors have been excited due to the bonus shares and right shares the banks are distributing to increase their paid up capital.

The experts stressed on the need of investors’ education for stability and sustained growth of capital market. Short term gain and ‘whims’ have propelled stock market to the dangerous zone, they claimed. “Stock market is the fast track of capitalism,” Dr Chiranjibi Nepal, chairman of Securities Board of Nepal (SEBON), said speaking at a workshop on ‘Trend and Issues of Capital Market,’ organised by Nepal Rastra Bank (NRB), Bankers’ Training Centre (BTC), here.

“But it must also follow the market norms. There is nothing to be encouraged about the current growth,” the chief of regulatory body said adding that capital market crash will have severe impact on total national economy.

The world over, stock is considered very sensitive as they immediately react to political, social and economical change. However, Nepali stock seems to have no effect at all. “Nepali stock is showing irrational behaviour,” Radhesh Pant, president of Nepal Bankers’ Association said. “On the day Maoists pulled out of the government, share prices touched the historic high,” he said adding that such trend is dangerous.

Similarly, shares of banks are gaining. The commercial banks group gained 23.23 points to post 984.86 points at the weekly closing. But real sector has no role in this growth, which is yet another signal of ‘dubidious’ growth. Investors might find themselves on road overnight as they are not going by the books and lured by the rumours.

“Stock price is directly related to the growth of bank,” Pant said adding that investors are not calculating growth prospectus of banks in next couple of years. “Due to cut-throat competition the banks are operating on very thin margin and they could not continue giving cash dividends as they have to increase their paid-up capital,” he added.

Since there is no more investment opportunity, alternative opportunities like bonds and mutual fund is need of the hour. “Mutual fund could be safer for the small investors,” said Upendar Kumar Poudel, vice-president of Finance Companies’ Association.

“Corrective measures are necessary and real sector must be encouraged to come to stock for sustained growth of capital market,” he said adding that its high time banks become cautious over margin lending on the secondary market.

Nabaraj Pokhrel, president of Nepal Brokers’ Association, on the occasion, said that open market sets its trend itself.

Bir Bikram Rayamajhi, deputy governor of NRB and Arjun Adhikari, director of BTC also showed concern over unnatural stock growth. for the stability of the market, Nepse has also brought some more rules. It is believed to help stop stock market crash.