Manufacturing sector shying away from Nepse
KATHMANDU:
In the absence of many listed manufacturing companies, the shares of the subgroup rarely see the trading floor.
In the last 172 days of trading, the manufacturing companies’ scrips were traded for only a quarter of the total trading days. They were traded for only 49 days, according to Nepal Stock Exchange (Nepse). Moreover, since the beginning of 2009, manufacturing sector’s shares were traded for mere 102 days among the total 636 trading days.
“Without the active participation of the manufacturing companies in the secondary market, Nepse will always remain dominated by the financial institutions that could not develop the share market let alone the national economy,” stock analyst Rabindra Bhattarai said, adding that the share market could reflect the real picture of economy, when more manufacturing companies get listed in the secondary market. Since the beginning of 2011, the number of shares traded belonging to the manufacturing subgroup comprised less than 0.01 per cent of the total shares listed under manufacturing subgroup.
There are more than 34 million unit shares of 18 manufacturing companies listed in the stock exchange however, the market saw 876,000 unit shares of only three companies being traded in the last 162 trading days. Bottlers Nepal-Terai (BNT), Bottlers Nepal-Balaju and Unilever Nepal are the only three companies that witnessed their shares being traded in the secondary market since the beginning of 2011.
Four other companies’ shares were traded in 2010 while two companies’ shares were not traded since 1995. Most of the manufacturing companies are almost non-existent so that investors also care less about their shares.
“We are refraining from delisting these manufacturing companies as delisting will further contract the presence of real sector companies on Nepse,” said managing director of Nepse Shankar Man Singh. It is unfortunate that minimal shares of existing manufacturing companies get traded while the capital market is aspiring to bring more of the real sector companies in existence, he expressed.
The stakeholders have been expressing the need for more presence of real sector in the capital market as overwhelming presence of financial intermediaries in the secondary market could not be beneficial to the market in the long run. The vibrancy of the stock market is one of the preliminary conditions for any market.
The companies prefer raising capital by borrowing from financial institutions instead of offering shares to public. The government has even announced 10 per cent tax rebate to the companies that get listed in the stock exchange as an incentive in the last fiscal year’s budget. But not a single manufacturing company joined the share market in the last couple of years.
The private sector players do not opt for raising necessary funds from floating shares as the incentives are minimal compared to the responsibilities of public limited companies. They keep insisting that by going public in the present volatile market scenario is dangerous. But Unilever Nepal — the company that is giving highest return — could be an example for them.
The investors also lost confidence on manufacturing companies due to closure of some of the listed companies in the past.
But there are many multi national manufacturing companies in Nepal especially in fast moving consumer goods (FMCG) segment that are doing fairly well, however, they too are shying away from getting listed.
Source: THT
In the absence of many listed manufacturing companies, the shares of the subgroup rarely see the trading floor.
In the last 172 days of trading, the manufacturing companies’ scrips were traded for only a quarter of the total trading days. They were traded for only 49 days, according to Nepal Stock Exchange (Nepse). Moreover, since the beginning of 2009, manufacturing sector’s shares were traded for mere 102 days among the total 636 trading days.
“Without the active participation of the manufacturing companies in the secondary market, Nepse will always remain dominated by the financial institutions that could not develop the share market let alone the national economy,” stock analyst Rabindra Bhattarai said, adding that the share market could reflect the real picture of economy, when more manufacturing companies get listed in the secondary market. Since the beginning of 2011, the number of shares traded belonging to the manufacturing subgroup comprised less than 0.01 per cent of the total shares listed under manufacturing subgroup.
There are more than 34 million unit shares of 18 manufacturing companies listed in the stock exchange however, the market saw 876,000 unit shares of only three companies being traded in the last 162 trading days. Bottlers Nepal-Terai (BNT), Bottlers Nepal-Balaju and Unilever Nepal are the only three companies that witnessed their shares being traded in the secondary market since the beginning of 2011.
Four other companies’ shares were traded in 2010 while two companies’ shares were not traded since 1995. Most of the manufacturing companies are almost non-existent so that investors also care less about their shares.
“We are refraining from delisting these manufacturing companies as delisting will further contract the presence of real sector companies on Nepse,” said managing director of Nepse Shankar Man Singh. It is unfortunate that minimal shares of existing manufacturing companies get traded while the capital market is aspiring to bring more of the real sector companies in existence, he expressed.
The stakeholders have been expressing the need for more presence of real sector in the capital market as overwhelming presence of financial intermediaries in the secondary market could not be beneficial to the market in the long run. The vibrancy of the stock market is one of the preliminary conditions for any market.
The companies prefer raising capital by borrowing from financial institutions instead of offering shares to public. The government has even announced 10 per cent tax rebate to the companies that get listed in the stock exchange as an incentive in the last fiscal year’s budget. But not a single manufacturing company joined the share market in the last couple of years.
The private sector players do not opt for raising necessary funds from floating shares as the incentives are minimal compared to the responsibilities of public limited companies. They keep insisting that by going public in the present volatile market scenario is dangerous. But Unilever Nepal — the company that is giving highest return — could be an example for them.
The investors also lost confidence on manufacturing companies due to closure of some of the listed companies in the past.
But there are many multi national manufacturing companies in Nepal especially in fast moving consumer goods (FMCG) segment that are doing fairly well, however, they too are shying away from getting listed.
Source: THT
