State-owned entities with cash enter stock market to pull it out of its downward spiral
KATHMANDU, JUN 06 -
State-owned financial institutions are turning into major share traders following government instructions to buy stocks on the Nepal Stock Exchange (Nepse) to help energize the flagging bourse.
The Citizen Investment Trust (CIT) has started purchasing shares in the primary and secondary markets while the Employees’ Provident Fund (EPF) is preparing to join the action.
The CIT has bought promoter and public shares of banks and financial institutions (BFIs) worth Rs 87 million. The EPF has submitted a proposal to its board to buy shares of BFIs. Another state-owned enterprise, Rastriya Beema Sansthan (RBS), has been studying whether its act allows it to invest in the secondary market.
About two weeks ago, the government had asked these state-owned entities to buy shares to give a shot in the arm to the capital market which has been witnessing a bearish run for the last two years.
The CIT purchased 775,000 rights shares of Citizens Bank worth more than Rs 80 million which its promoters had passed up.
One of the key institutional depositors in BFIs, the CIT has also ventured into the secondary market to purchase pubic shares. It has bought more than 20,000 shares of Nepal Telecom, NIC Bank, Prime Commercial Bank and Citizens International Bank worth around Rs 7 million. Its largest purchase was 15,000 shares of Nepal Telecom.
“The move is guided by our aim to diversify our portfolio,” said CIT executive director Rishi Ram Gautam. “We also sought to fulfil the instruction given to us by the government.”
The CIT has purchased promoter shares of Upper Tamakoshi worth Rs 180 million after its agreement with the project to provide financing of Rs 2 billion.
Meanwhile, the EPF board has been discussing its plan to enter the secondary market. “Once the board reaches a conclusion, we can go ahead with the plan,” said EPF administrator Ramesh Bhattarai.
He added that the EPF would be purchasing both promoter and public shares provided the criteria set by the EPF are fulfilled. These conditions state that the concerned BFIs should have been earning a profit for the last three consecutive years, followed the procedures set by the Securities Board of Nepal and complied with the directives of Nepal Rastra Bank (NRB).
The EPF Act allows it to purchase shares of BFIs only. It has made a huge investment worth more than Rs 1 billion in the shares of different BFIs.
Meanwhile, RBS has been debating whether to invest in the capital market or not. “The board has directed the management to do an informal study first,” said an RBS board member.
With government agencies with abundant resources coming to the secondary market, experts predict that it will pull the stock market out of its downward spiral.
“Government institutions like the EPF and the CIT should work as market makers to bring stability to the stock market,” said Nepse general manager Shankar Man Singh. “The entry of these institutions into the secondary market will help boost investor confidence.”
Source: Kantipur
State-owned financial institutions are turning into major share traders following government instructions to buy stocks on the Nepal Stock Exchange (Nepse) to help energize the flagging bourse.
The Citizen Investment Trust (CIT) has started purchasing shares in the primary and secondary markets while the Employees’ Provident Fund (EPF) is preparing to join the action.
The CIT has bought promoter and public shares of banks and financial institutions (BFIs) worth Rs 87 million. The EPF has submitted a proposal to its board to buy shares of BFIs. Another state-owned enterprise, Rastriya Beema Sansthan (RBS), has been studying whether its act allows it to invest in the secondary market.
About two weeks ago, the government had asked these state-owned entities to buy shares to give a shot in the arm to the capital market which has been witnessing a bearish run for the last two years.
The CIT purchased 775,000 rights shares of Citizens Bank worth more than Rs 80 million which its promoters had passed up.
One of the key institutional depositors in BFIs, the CIT has also ventured into the secondary market to purchase pubic shares. It has bought more than 20,000 shares of Nepal Telecom, NIC Bank, Prime Commercial Bank and Citizens International Bank worth around Rs 7 million. Its largest purchase was 15,000 shares of Nepal Telecom.
“The move is guided by our aim to diversify our portfolio,” said CIT executive director Rishi Ram Gautam. “We also sought to fulfil the instruction given to us by the government.”
The CIT has purchased promoter shares of Upper Tamakoshi worth Rs 180 million after its agreement with the project to provide financing of Rs 2 billion.
Meanwhile, the EPF board has been discussing its plan to enter the secondary market. “Once the board reaches a conclusion, we can go ahead with the plan,” said EPF administrator Ramesh Bhattarai.
He added that the EPF would be purchasing both promoter and public shares provided the criteria set by the EPF are fulfilled. These conditions state that the concerned BFIs should have been earning a profit for the last three consecutive years, followed the procedures set by the Securities Board of Nepal and complied with the directives of Nepal Rastra Bank (NRB).
The EPF Act allows it to purchase shares of BFIs only. It has made a huge investment worth more than Rs 1 billion in the shares of different BFIs.
Meanwhile, RBS has been debating whether to invest in the capital market or not. “The board has directed the management to do an informal study first,” said an RBS board member.
With government agencies with abundant resources coming to the secondary market, experts predict that it will pull the stock market out of its downward spiral.
“Government institutions like the EPF and the CIT should work as market makers to bring stability to the stock market,” said Nepse general manager Shankar Man Singh. “The entry of these institutions into the secondary market will help boost investor confidence.”
Source: Kantipur
