Average daily turnover of Nepse doubles

KATHMANDU, MAY 30:

The average daily turnover of the stock market has more than doubled in the current fiscal year following the entry of mutual funds and attractive public offerings.

The average daily turnover in last 10 months stands at Rs 93.06 million, while it was Rs 40.3 million in the corresponding period of last fiscal. The surge in Nepal Stock Exchange (Nepse), experienced post mid-April 2012, has helped in making shares attractive for investors once again.

Moreover, the increased amount of shares in the past one year also did not hamper stock prices as demand kept coming in. The additional listing of 1.81 million unit shares in the last one year also did not adversely affect share prices.

Earlier, oversupply of shares was blamed for the stock market going through an extreme bearish trend in the last two years. Average daily turnover was around Rs 95 million in corresponding period of fiscal year 2008-09 — the year the Nepse index started to tumble.

In the last one year, the market saw initial public offerings (IPOs) of 11 companies, including three major commercial banks that were alone worth Rs 2.2 billion.

Likewise, there were two new fund offers of mutual funds worth Rs 1.25 billion. Moreover, there were rights shares and bonus shares worth billions listed at the stock exchange in the last one year.

The prospects of attractive yields on the stocks — including both returns and dividends — have brought back investors. Shares of Civil Bank, Commerz and Trust Bank Nepal, and Janata Bank changed hands quite a lot of time since their listing. Likewise, Nepal Bank Ltd’s relisting and prospects of subscription of rights shares of insurance companies also propelled transactions.

“When the market is performing well it is natural for investors to be attracted to buying shares and the number of transactions go up,” said president of Nepal Investors’ Forum Rajkumar Timilsina.

In the last one year, the Nepse index has appreciated by 25 per cent. The index that closed at 390 points a year ago has gone up to as high as 555 points, but it is hovering near 500 points as of now.

“Earlier, when the market was going up, investors rushed in to buy shares and when it showed signs of going down, profit booking also drove up transactions,” he added.

Along with stock prices, market capitalisation also surged by 30 per cent since mid-May 2012. The stock market capitalisation, that stood at Rs 368.8 billion a year back, has reached Rs 412.8 billion by mid-May, 2013.

There are still more stocks worth a couple of billion rupees that will be coming to the market with the upcoming IPOs of Mega Bank Nepal, Century Commercial Bank, Sanima Mai Hydropower, and Upper Tamakoshi Hydropower, to name a few. “There is space for more mutual funds in current market condition as institutional investors will stabilise the market further,” pointed out CEO of Siddhartha Capital — that manages Siddhartha Investment Growth Fund I — Dhurba Timilsina.

Source: THT