Only 85% of listed shares tradable in NEPSE; Out of 18 listed companies in Manufacturing sector only 5 in transaction, what happened to the rest?

Mon, Jan 28, 2019 3:25 PM on Exclusive, Stock Market,

-ShareSansar

"Elephants have two sets of teeth; one for show-off and other to chew"

Well, elephants were designed that way by nature so they have no say in it, but in today's dynamic marketing-focused world this has become a strategy. For example, one of the key strengths of Citi Bank is its presence in 71 countries across the globe. Actually, it's also in Kathmandu but is it trying to grab market here? No, they're here and in some other places too not because of market attractiveness but because they want to maintain their tagline as the bank with the highest network.

Coming back to Nepal, has this been employed here too? For one – we can look at Nepal Stock Exchange (NEPSE). The only stock exchange of the country now has shares of 217 companies and mutual funds listed in it. However, as you might have already guessed, are they all tradable?

The 217 scrips belong to 11 sectors, mutual funds, and preferred stock. Out of them, only 185 are tradable as you can see below:

Currently, there are 33 listed companies under the development bank sector in NEPSE. However, NIDC Development Bank has already started a joint transaction with Rastriya Banijya Bank (RBB). So, why is NIDC still there?

Likewise in Finance Companies sector, there are currently 27 listed companies, which comprises of Synergy Finance. However, in reality, Synergy Finance no longer exists as it was acquired by Best Finance and is currently being traded under the symbol BFC.

What could the reason behind this be? Operational inefficiency of NEPSE or their effort to keep the number of listed companies high.

In the table above, we can also see that the percentage is shockingly low for Manufacturing & processing sector and the trading sector. We've been saying for so long that our market is heavily dominated by BFIs and service sector and that we need more companies from the real sector like manufacturing companies and so on. But looking at these percentages, the percentage of BFIs in real terms is even higher.

In some way or other, when it comes to regulation our country has always fallen short. In our recent story, we saw how companies weren't conducting their AGM timely. When the AGM isn't on time, what kind of transparency are we getting as an investor?

If we are really looking for amendments, there are two sets of the path here:

-NEPSE can either scrap these companies' scrips or officially declare them as no more tradeable.

-Or the regulation should be made more effective and enough transparency and accountability should be generated so that investors can know what is happening and how or why is it happening.

We can look into each sector individually via the following tables:

Commercial Bank