Rising interest rates, fiscal year-end effect, surge in shares supply blamed
KATHMANDU, June 24: The Nepal Stock Exchange (Nepse) index shed 16.49 points this week to close at 1,559.49 points on Thursday-the last trading day of the week.
After climbing to a record high level in July last year, the stock market has taken a bearish trend amid shortage of lendable fund in the banking system. Though excess liquidity in the banking system and cheaper financing from bank and financial institutions (BFIs) had fuelled the stock market boom in the first half of the last year, credit crunch in the banking system since then has made the market bearish, say observers.
The surge in supply of shares following the listing of bonus shares and rights shares of BFIs and insurance companies, who are raising their paid-up capital, are the other reasons that have sent the share prices down, according to share market analysts.
“There has been a massive supply of shares in recent days as BFIs and insurance companies, who are required to raise their paid-up capital, are issuing stock dividend and rights shares,” Anjan Raj Poudyal, former president of Stock Brokers' Association of Nepal (SBAN), said. He also said that the current downward trend is also a reflection of loss of charm of stocks in toward the fiscal year-end. “Listed companies would already complete their annual general meeting and distribution of dividend. So, there would not be much charm in the stock market toward the fiscal year-end,” he added.
A total of 5.29 million units of shares of 164 companies worth Rs 2.96 billion were traded in the market this week through 25,858 transactions.
Insurance group was the biggest loser of the week as its sub-index plunged 173.99 points this week to end at 8,188.98 points. Manufacturing and Processing group went down 27.1 points to close the week at 2,375.98 points, while the sub-indices of Development Bank and Finance groups also fell by 15.77 points and 10.69 points, respectively, to end the week at 1,917.72 points and 748.96 points. Banking, the heavyweight trading group in the secondary market, also ended 14.51 points lower at 1,391.38 points. Hydropower group ended in the red zone as its sub-index fell by 2.43 points to settle at 1,962.33 points.
'Others' and Hotels groups, however, posted gains this week. While 'Others' sub-indices inched up by 1.45 points to end the week at 688.05 points, Hotels group logged gains of 1.02 points to settle at 2,206.62 points.
Trading group remained unchanged at 212.76 points.
Everest Bank Ltd topped the list of companies this week in terms of turnover (Rs 300.6 million) and number of transactions (2,093), while Prabhu Bank Ltd (Promoter) remained at the top in terms of number of shares traded (780,000).
In other news, bonus shares of Neco Insurance Company Ltd, Nepal Life Insurance Company Ltd and Prudential Insurance Company Ltd and rights shares of Neco Insurance Company Ltd, Sanima Bank Ltd and Kumari Bank Ltd were listed in the Nepse this week for trading.
SEBON suspends trading of Everest Insurance, NHPL
Nepal Stock Exchange (Nepse) has suspended trading of shares of Everest Insurance Company Ltd and National Hydropower Company Ltd (NHPCL) as per the instruction of the Securities Board of Nepal (Sebon) - the capital market regulator.
The trading has been halted since Wednesday after the Sebon directed the Nepse to suspend their trading until further notice.
The Sebon had directed the stock exchange company to halt trading of the insurance company over it received complaint regarding leakage of market-sensitive information.
Likewise, dispute over the legitimacy of board directors of the NHPCL and the decision of the directors and its CEO have led the Sebon to ban share trading of the hydropower company until further notice.