NEPSE bounces to pre-quake situation; wiser for investors to wait until Q4 report
Priyanka Jha and Jashma Sainju
ShareSansar June 5:
NEPSE was seen in bearish trend after it resumed its trading on may 24, one month after the devastating earthquake.
Before NEPSE resumed its market on May 24, general people had a perception that NEPSE points will drop sharply as earthquake would trigger huge claims against insurance companies and an adverse impact on both the deposits and loans of financial institutions.
Just before the massive earthquake, NEPSE was at 938.19 levels whereas the disaster led the benchmark index to settle at 841.96 levels on May 28, after the one week of resumption of its trading. Later, this week NEPSE was seen in bullish trend and bench mark index settled at 871.94 points on Sunday, 890.43 points on Monday, 901.98 points on Tuesday and 925.49 points on Wednesday. At the end of this week, the NEPSE points surged up by 1.35 points closing down at 926.84 points. After a two week the market is somewhat back to the situation prior to the earthquake.
The effect of earthquake that was seen in the market in the first week of its resumption was demolished this week after the 4 major political parties have shown a fresh commitment to prepare first draft of the new constitution by mid-July. This had led to a positive scenario for the market and the confidence among the investors soared up.
Whereas, the actual condition of the listed companies are still unknown. Experts say it would be wiser for the investors to wait until the fourth quarter reports of the financial institutions to know about the adverse impact of the earthquake. 30 Commercial banks have invested a total loan of Rs 61.70 arba in real estates and these money would be affected which will be shown in its fourth quarter reports . Everest bank has invested 4.02%, Citizens bank has invested 11.49%, Nepal Bangladesh bank has invested 5.40, Nepal Investment bank has invested 6.60%, and Prime Commercial bank has invested 12.41% in real estate out of total loan. Damages caused by earthquake have triggered huge claims against the insurance companies and every claim is a loss to them.
The financial institutions and insurance companies might suffer short terms negative impacts of the earthquake but it can be also considered as an opportunity. The charm towards insurance companies has also increased. In case of banks and microfinance companies, the demand of loans would heighten.
