During the review period of August 25 to September 19, the Nepal Stock Exchange (NEPSE) index went down by 57.77 points (-4.76%) to close below the long-term support level of 1200 points at 1155.30 points. Delay in the implementation of policies related to margin trading, stock brokerage license to commercial banks and settlement of shares transaction period were some of the key drawbacks that further deteriorated investor confidence during the review period.
However, market confidence boosted during the closing period of the review month on reaffirmed commitment from the government as well as regulatory bodies to take up reform works in the securities market. Nonetheless, due to the market downfall, the total market turnover during the period fell by 27.13% and stood at Rs 6.99 billion.
During the review period, contrary to the previous period, all of the sub-indices landed in the red zone. The Life Insurance sub-index (-10.25%) was the biggest loser as share value of Nepal Life Insurance (-Rs 98) and Life Insurance (-Rs 95) went up. Others sub-index was second in line with drop in the share value of Citizen Investment Trust (-Rs 585).
Similarly, Hydropower sub-index (-8.19%) faced a drop as the share value of Arun Kabeli Hydropower (-Rs 26) and Sanima Mai (-Rs 26) went down. Non-life insurance sub-index (-7.59%) also saw a decrease in the share value of Rastriya Beema Company (-Rs 749) and Sagarmatha Insurance (-Rs 88).
Likewise, Hotels sub-index (-5.55%) also fell with decrease in the share value of Oriental Hotel (-Rs 54). The Commercial Bank sub-index (-3.60%) also saw a downfall with fall in the share value of Standard Chartered (-Rs 78) and NIC Asia (-Rs 67). Manufacturing and Processing sub-index (-2.22%) followed suit with slump in the share value of Himalayan Distillery (-Rs 86).
Microfinance sub-index (-1.94%) also shed value with significant decrease in the share value of Samata Microfinance (-Rs 706) and National Microfinance (-Rs 264). Besides, Finance sub-index (-1.56%) also witnessed a plunge in share value of City Express Finance (-Rs 17). Finally, Development Bank sub-index (-1.38%) also went down; top losers in this sub-index were Muktinath Bikas Bank (-Rs 19) and Shangrila Development Bank (-Rs 8).
News and Highlights
The Securities Exchange Board of Nepal (SEBON), on September 16, directed Nepal Stock Exchange (NEPSE) to submit a progressive report on previously given directions in an attempt to monitor the operation of the secondary market. Following this, NEPSE has to submit a report on the following issues within seven days on issues relating to broker license to banks that have fulfilled all the required criteria; distribute broker license under the federal structure; investor protection fund and revising existing mechanisms on investor protection; Employee Provident Fund, Citizen Investment Trust and Social Security Fund as securities dealers to make the OTC market active and techno-friendly; dematerialisation of small-scale investors who still have materialised shares and others.
Additionally, it has also directed (Central Depository System and Clearing Ltd) CDSC to submit an inspection report regarding illicit dematerialisation (Demat) accounts opened by depository members. The report should also include topics related to effective implementation of Settlement Guarantee Fund, System Audit and so on.
In the public issue front, SEBON has approved Initial Public Offering (IPO) of Shiva Shree Hydropower to the general public worth Rs 335.11 million. Siddhartha Capital Limited has been issued as its issue manager. Further, SEBON has also added the IPOs of Singhati Hydro Energy worth Rs 4.35 million and Nepal Re-insurance Company worth Rs 16 billion to its pipeline. For Singhati Hydro Energy, Mega Capital Market has been appointed as the issue manager and CARE-NP IPO Grade 4 has been assigned by Care Nepal indicating below-average fundamentals. For Nepal Re-insurance, RBB Merchant Banking has been appointed as the issue manager and IPO Grade 2 has been assigned by ICRA Nepal indicating above average fundamentals.
Despite the late recovery in the index during the review period, the market sentiment seems bearish with low investor confidence. Attractive dividend declarations from the listed companies were of no avail while regulatory bottlenecks have further dampened the situation.
Attempts to review issues of the secondary market in the form of progressive or inspection reports and accordingly introduce reforms and assurance in the share market from affiliated agencies could however provide much needed impetus to boost investor confidence.
This is an analysis from beed management pvt. ltd. No expressed or implied warrant is made for usefulness or completeness of this information and no liability will be accepted for consequences of actions taken on the basis of this analysis.