Nepal Stock Exchange (Nepse) - the barometer of investors´ confidence -- dropped to 29-month low on Tuesday with total market capitalization -- total worth of listed shares in secondary market -- falling to Rs 397.63 billion. Total market capitalization had touched an unprecedented 1175.38 points, with the listing of new shares of Nepal Telecom driving up the total market capitalization also to the highest level at Rs 612.54 billion on August 31 last year.
The Nepse shed 5.62 points to close at 543.41 points on Tuesday, with the sub-index of Finance group losing a whopping 22.5 points.
Stock analysts said shares of International Leasing and Finance Company (ILFC) were traded at Rs 243 per unit, down by Rs 233 per unit as compared to previous close on Monday when the company announced its book closure.
Nepse dropped by 631.97 points over the 15 months period, with the benchmark index closed at 543.41 points on Tuesday´s trading. Nepse had dropped to 565.86 points on November 12, down by over 11 points as compared to previous day´s close, and market capitalization had also dropped to Rs 413.67 billion amid rumors that the government is preparing to allow selling promoters´ shares in the secondary market.
“The bearish trend in the secondary market will continue unless the government settles the issue of promoters´ shares,” said Nanda Kishore Mundada, president of Nepal Stock Brokers´ Association.
A series of events such as formation of Maoist-led government, controversial remarks by the then finance minister Dr Babu Ram Bhattarai on capital market, increment of capital gains tax (CGT) by the then government through budget, and the government´s announcement to bring investors having share transaction worth over Rs 5 million under Voluntary Disclosure of Income Scheme (VDIS) played major role in bringing down Nepse index before the fall of Maoist-led government on May 4. The Maoist-led government had raised CGT from 10 to 15 percent in budget for fiscal year 2008/09.
Despite formation of the new government led-by CPN-UML, Nepse could never gain momentum on the days that followed.
The Nepse dipped to 609.46 points and the market capitalization also dipped to Rs 334.30 billion on January 22, after the Nepal Stock Exchange Ltd provided a list of 300 investors, whose share transactions had exceeded Rs 5 million in a single trading, to the Inland Revenue Department for VDIS purpose.
The new government formed on May 23 lowered CGT to 10 percent and also promised some market-friendly programs like Central Depository System (CDS), which brought cheers in the face of investors.
However, Nepse couldn´t consolidate in the days that followed. Book closures of different banks, political uncertainty amid different agitation programs announced by the Maoist and lately, increasing fears on the possible arrivals of promoters´ share in the secondary market, which is already flooded with huge number of share due to initial public offerings (IPO) by different financial institutions, continued to dampen investors´ hope of recovery in the secondary market.
prabhakar@myrepublica.com
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