Investors refuse to sell shares of newly listed firms
KATHMANDU, OCT 19:
Shares of newly listed companies are hardly traded as investors are not eager to sell immediately after listing. Among the six companies that were listed at Nepal Stock Exchange (Nepse) this fiscal year, shares of only four companies have been traded.
Shares of two companies –– Tourism Development Bank and Kanchan Development Bank –– were traded only six times in total since their listing in August. Likewise, shares of Metro Development Bank and Pacific Development Bank that were listed last week have had their shares traded only twice.
Nepal Consumer Development Bank’s shares have not been traded and Paschimanchal Grameen Bikas Bank’s shares can’t be traded due to its ongoing merger procedure.
“Investors have stopped taking primary issue of shares as one-off chance to make money, so there is no selling pressure for newly listed shares these days,” pointed out president of Stock Brokers Association of Nepal Anjan Raj Paudyal. During the stock market’s heydays three years back, stocks of many companies opened at a price higher than Rs 1000, as clever investors were able to inflate the price through rumours. “At that time, brokers used to be swamped with sell orders on the opening day.”
Then Nepse stepped in and brought an opening base price band –– between three times to five times the net worth of the company –– to curb the unnecessary increase in share prices even before the shares had debuted on the stock floor.
Last year, Nepse revised its débutante price rules for new stocks to kick-start the trading of newly listed shares faster. According to the new rules, the debut price for newly listed companies can be anything between the paid up value and three times the net worth.
“The revised provision has also reduced the instances of share prices skyrocketing on its debut prompting shareholders to sell shares to cash in on the profit before share prices slump,” said chairman of Securities Research and Services Rabindra Bhattarai.
Both Bhattarai and Paudyal attribute the increased awareness among investors for the lack of selling pressure immediately after the company’s listing. “Investors have become selective and more concerned over return-based stocks and are happy to hold on to the shares for longer depending on the company,” said Bhattarai.
NCM Mutual Fund 2059 ends
NIDC Capital Markets Ltd (NCML)’s NCM Mutual Fund 2059’s tenure completed on October 16. NCML will now liquidate it and pay unit holders by three months. It had 10 million units listed 10 years back at Nepse. Its last traded price stood at Rs 25.36, the fund was initially offered at Rs 10 per unit. There are about 2300 unit holders at present. It has been giving dividends ranging from five per cent to 15 per cent in the last 10 years. The market capitalisation of the mutual fund stood at Rs 254 million at its last traded price.
Source: THT
