Nepse continues on bearish path
KATHMANDU, June 8:
Over supply of shares, rising short term interest rates, lack of liquidity in the market and political uncertainty dragged the secondary market to six-and-a-half year low to 317.49 points today. Despite government’s repeated assurance, all the subgroups traded today ended in the red zone pulling the Nepse down by 5.7 points to close the day’s trading at 317.49 points.
The banking subgroup lost 7.77 points followed by others subgroup that shed 5.87 points and hydropower 5.7 points.
“Currently, average daily trading has come down by 73.89 per cent from the height of August 31, 2008, when the Nepse hit all time high of 1175 points,” said Nepse senior officer Niranjan Phuyal. “Similarly, the Nepse has also come down by 72.11 per cent.”
Total paid-up capital of the listed companies stood at Rs 97.09 billion in mid-April 2011, registering an increase of 30.7 per cent over the same period a year ago due to an increase of additional listing of securities at the Nepse.
The number of investors have not increased, however additional securities worth Rs 24 billion — ordinary share of Rs 8.09 billion, bonus share of Rs 3.57 billion, right share of Rs 7.35 billion and government securities of Rs 4.99 billion — were added in the secondary market, at mid-April 2011. However, due to significant increase in the supply of securities, the year on year, Nepse index declined by 16.1 per cent to 373.20 points in mid-April 2011. It had stood at 444.76 in mid-April 2010.
Similarly, the year-on-year stock market capitalisation decreased by 3.9 per cent to Rs 331 billion, in mid-April 2011. And as of today, it has dropped to Rs 282.57 billion.
The ratio of market capitalisation to gross domestic product (GDP) stood at 27.2 per cent in mid- April 2011 but it was 32.5 per cent a year ago. Of the total market capitalisation, the share of bank and financial institutions stood at 68.6 per cent followed by manufacturing and processing companies at 2.7 per cent, hotels at 1.7 per cent, business entities at 0.5 per cent, hydropower at five per cent and other sectors at 21.5 per cent.
The domination of financial institutions instead of real sector is a major cause to be worried as the secondary market could not represent the real economic growth.
But market analyst Rabindra Bhattarai opined that the market ha a direct corelation with economic growth. “The market touched 963.36 points in 2007-08, when the growth rate was at 5.8 per cent,” he said, adding that the economic growth has dropped in the recent years and so has the Nepse.
This year the growth is projected at 3.47 per cent. Total number of companies listed at the secondary market has also increased from 168 in mid-April 2010 to 204 in mid-April 2011 overflooding the market.
Source: THT
Over supply of shares, rising short term interest rates, lack of liquidity in the market and political uncertainty dragged the secondary market to six-and-a-half year low to 317.49 points today. Despite government’s repeated assurance, all the subgroups traded today ended in the red zone pulling the Nepse down by 5.7 points to close the day’s trading at 317.49 points.
The banking subgroup lost 7.77 points followed by others subgroup that shed 5.87 points and hydropower 5.7 points.
“Currently, average daily trading has come down by 73.89 per cent from the height of August 31, 2008, when the Nepse hit all time high of 1175 points,” said Nepse senior officer Niranjan Phuyal. “Similarly, the Nepse has also come down by 72.11 per cent.”
Total paid-up capital of the listed companies stood at Rs 97.09 billion in mid-April 2011, registering an increase of 30.7 per cent over the same period a year ago due to an increase of additional listing of securities at the Nepse.
The number of investors have not increased, however additional securities worth Rs 24 billion — ordinary share of Rs 8.09 billion, bonus share of Rs 3.57 billion, right share of Rs 7.35 billion and government securities of Rs 4.99 billion — were added in the secondary market, at mid-April 2011. However, due to significant increase in the supply of securities, the year on year, Nepse index declined by 16.1 per cent to 373.20 points in mid-April 2011. It had stood at 444.76 in mid-April 2010.
Similarly, the year-on-year stock market capitalisation decreased by 3.9 per cent to Rs 331 billion, in mid-April 2011. And as of today, it has dropped to Rs 282.57 billion.
The ratio of market capitalisation to gross domestic product (GDP) stood at 27.2 per cent in mid- April 2011 but it was 32.5 per cent a year ago. Of the total market capitalisation, the share of bank and financial institutions stood at 68.6 per cent followed by manufacturing and processing companies at 2.7 per cent, hotels at 1.7 per cent, business entities at 0.5 per cent, hydropower at five per cent and other sectors at 21.5 per cent.
The domination of financial institutions instead of real sector is a major cause to be worried as the secondary market could not represent the real economic growth.
But market analyst Rabindra Bhattarai opined that the market ha a direct corelation with economic growth. “The market touched 963.36 points in 2007-08, when the growth rate was at 5.8 per cent,” he said, adding that the economic growth has dropped in the recent years and so has the Nepse.
This year the growth is projected at 3.47 per cent. Total number of companies listed at the secondary market has also increased from 168 in mid-April 2010 to 204 in mid-April 2011 overflooding the market.
Source: THT
