Share prices rise dramatically post CA election

KATHMANDU:

Since the post-CA election bull-run, share prices of one-fifth of the traded companies surged by more than 50 per cent.

In the past two months, share prices of 34 companies have appreciated by 50 per cent as the stock market headed to a new high. During the period, Nepal Stock Exchange (Nepse) saw trading of 150 companies — including newly listed ones — of the 235 listed companies.

The fresh surge in stock prices that began right before the second CA election that was held on November 19 had many investors dancing their way to the banks. The average appreciation of share prices since early November to January stood at 22 per cent. During the period, the stock market index — Nepse index — increased by 30 per cent.

The index that stood at 600 points jumped over 700 points by December 4. The index even sprinted through 800 points in the next two weeks. However, it could not sustain itself above 800 points, sliding to the 770 level at present. Despite the index retracing its steps, stock investors are raking in profits due to the recent surge.

The share price of United Insurance has doubled in the last two months. One unit share of the insurance firm was at Rs 142 at the end of November, which is being traded at Rs 295 at present. Likewise, share prices of Kist Bank and Grand Bank have also witnessed a fair rise in the past two months.

“Mostly share prices of less expensive scrips have increased significantly in the past two months as investors are looking for cheap stocks to invest in,” said president of Nepal Investors’ Forum Raj Kumar Timilsina.

In last one year, capital market seems to have reclaimed its place as a major investment avenue. The appreciation in share prices has attracted investors to the capital market. Moreover, the easy financing made available by financial institutions at near 10 per cent interest has further helped the market rally. In addition, so far the dividends announced by the listed companies stand at near 30 per cent on average further making stocks desirable.

The stock market witnessed a surge right before the CA election was held. The hopes of a stable political future had fuelled expectations of investors. Likewise, the victory of liberal parties in the election further contributed in the stock price rise.

Among the high earners are 14 commercial banks that registered more than 50 per cent gain, 12 development banks, and a few finance and insurance companies that had share prices below Rs 200. In terms of amount, the share of Nepal Life Insurance has registered the highest gain of Rs 1,000 during the period. The insurance company’s shares traded at Rs 2,450 is being traded at Rs 3,450 at present, becoming the second most expensive scrip at Nepse.

However, there were 15 companies whose share prices declined despite the market rally. Himalayan General Insurance was the biggest loser in the last two months with its share price depreciating by 15 per cent.

Source: THT