Topsy-turvy year for stock market
KATHMANDU, JUL 17 -
The country’s capital market and investors didn’t have much to cheer about in fiscal 2011-12. The Nepal Stock Exchange (Nepse) crawled up 11.31 points to 389.72 as of the end of the fiscal year, having plunged to a depth of 298.89 points in March. The Nepse index started off the fiscal year at 378.41 points.
On May 8, the Nepse rebounded on the agreement on integration of former Maoist combatants into the Nepal Army, reaching a year-high of 432.82 points. However, the good times didn’t last long as the Constituent Assembly (CA) was dissolved without producing a constitution.
The capital market has stabilised some following a nine-point agreement between the government and investors in June. In a bid to give the capital market a shot in the arm, the government announced a series of measures including allowing banks and financial institutions to extend share purchase loans against the guarantee of stockbrokers, starting full-fledged operation of the central depositary system (CDS) within July, starting mutual funds and preparing guidelines for the entry of institutional investors in the capital market with the Citizens Investment Trust (CIT) as the market maker.
The Nepse index didn’t fall beyond 360 points after the announcement. “Investor confidence has been restored to a certain extent by the nine-point agreement,” said Anjan Raj Poudyal, president of the Stock Brokers’ Association of Nepal.
However, stock analysts said that the gloomy period for the capital market was not over yet. “Bankers have shown little interest to extend share purchase loans, only two of the listed companies have been registered at the CDS, and the CIT is yet to prepare an action plan to operate as the market maker,” said Rabindra Bhattarai, a stock analyst.
Banks and financial institutions (BFIs), which account for 90 percent of the listed companies on Nepse, are not performing well. “Their last quarter results will be issued in a few weeks, and if they are as disappointing as in the past quarters, it can trigger a further fall in the Nepse index,” said Bhattarai. “Commercial banks might not be affected much as their shares are the most sought after, but share prices of development banks and finance companies are likely to plummet.”
They have not been able to attract investors presently either. The development bank sub-index dropped from 298.04 points at the beginning of the fiscal year to 245.43 points at year-end. Likewise, finance companies fell from 304.14 points to 265.66 points. The group representing commercial banks, others, hotels, insurance companies, manufacturing companies and trading firms were able to register a growth.
However, an increase in the volume of trading and market capitalisation has been the bright spot for the capital market during the last fiscal year. Nepse recorded transactions worth Rs 10.27 billion during the year, up 54.12 percent from Rs 6.67 billion in 2010-11. The average volume of daily transactions was Rs 44.3 million. Similarly, the total market capitalisation of Nepse reached Rs 362.26 billion as of the end of the last fiscal year, compared to Rs 323.48 billion at the end of the previous fiscal year.
Nepse starts FY with loss
The Nepal Stock Exchange ended 4.8 points lower at 384.92 on Monday, the first trading day of the financial year 2012-13. Experts said the government’s failure to bring a full budget for the new fiscal year affected investor sentiments. “Investors were expecting some specific programmes from the government,” said Anjan Raj Poudyal, president of Stock Brokers’ Association of Nepal. The entire sub indices, except for insurance companies and manufacturing and production firms, registered losses. Trading companies remained intact.
Source: The Kathmandu Post
