BFIs drag Nepse down 19 points
KATHMANDU, JUN 12 -
Some time ago, shares of banks and financial institutions (BFIs) were considered valuable as their prices used to jump multiple folds right after the initial public offering (IPO).
Now the situation has changed with the banking sector witnessing liquidity crunch since January 2009 and increasing incidents of fraud. The value of public shares of two commercial banks—KIST and Macchapuchhre—witnessed a freefall to the par value of Rs 100 per share last Thursday.
With one after another financial institutions heading towards trouble, requiring emergency rescue measures from the central bank, the public confidence on them seems to have dented. The share market is responding negatively to baking scandals that surfaced over the last three months—crisis in People’s Finance and Vibor Bikas Bank being the latest.
The Nepal Stock Exchange (NEPSE) index tumbled by 18.92 point to 308.88 points last week, particularly because of the group comprising commercial banks that saw a heavy fall in its index.
Except the hotels’ group, all other sectors witnessed decline in their indices. Commercial banks’ group led the slump shedding 25.56 points. Hydropower companies, others, development banks, manufacturing, trading, insurance and finance companies also followed suit.
Last week, share prices of 18 listed companies plunged below Rs 100, the minimum price sought while issuing IPOs. How financial institutions are losing public confidence is clear from the fact that of these 18 companies, 16 are B and C class financial institutions. Also, share prices of eight commercial banks fell below Rs 150. “Investors have lost their confidence on banking institutions,” said Rajan Singh Bhandari, vice-president of Nepal Bankers’ Association. “Share price of banks coming down to Rs 100 is a grave situation.”
Bhandari said the government and the central bank must take some measures to restore public confidence in both the banking sector and the stock market. He, however, hailed the government’s recent move of asking institutional depositors such as Employees’ Provident Fund, Citizens Investment Trust to purchase shares in bulk in the secondary market.
The central bank is also taking more flexible approach in injecting liquidity in BFIs. It has also decided not to withdraw its deposits from B and C financial institutions.
Source: Kantipur
Some time ago, shares of banks and financial institutions (BFIs) were considered valuable as their prices used to jump multiple folds right after the initial public offering (IPO).
Now the situation has changed with the banking sector witnessing liquidity crunch since January 2009 and increasing incidents of fraud. The value of public shares of two commercial banks—KIST and Macchapuchhre—witnessed a freefall to the par value of Rs 100 per share last Thursday.
With one after another financial institutions heading towards trouble, requiring emergency rescue measures from the central bank, the public confidence on them seems to have dented. The share market is responding negatively to baking scandals that surfaced over the last three months—crisis in People’s Finance and Vibor Bikas Bank being the latest.
The Nepal Stock Exchange (NEPSE) index tumbled by 18.92 point to 308.88 points last week, particularly because of the group comprising commercial banks that saw a heavy fall in its index.
Except the hotels’ group, all other sectors witnessed decline in their indices. Commercial banks’ group led the slump shedding 25.56 points. Hydropower companies, others, development banks, manufacturing, trading, insurance and finance companies also followed suit.
Last week, share prices of 18 listed companies plunged below Rs 100, the minimum price sought while issuing IPOs. How financial institutions are losing public confidence is clear from the fact that of these 18 companies, 16 are B and C class financial institutions. Also, share prices of eight commercial banks fell below Rs 150. “Investors have lost their confidence on banking institutions,” said Rajan Singh Bhandari, vice-president of Nepal Bankers’ Association. “Share price of banks coming down to Rs 100 is a grave situation.”
Bhandari said the government and the central bank must take some measures to restore public confidence in both the banking sector and the stock market. He, however, hailed the government’s recent move of asking institutional depositors such as Employees’ Provident Fund, Citizens Investment Trust to purchase shares in bulk in the secondary market.
The central bank is also taking more flexible approach in injecting liquidity in BFIs. It has also decided not to withdraw its deposits from B and C financial institutions.
Source: Kantipur
