The Securities Board of Nepal (Sebon) has tried to assure investors by stating that the present plunge in Nepse is not 'unnatural'. Nepse has been showing bearish trend since last six consecutive months but the newly appointed chairman of the Sebon Dr Surbir Poudyal opined that its a 'price correction'.
Though he could not clearly spell out the regulatory authority's strategy on how to cope up with the present downward trend -- that might hit financial sector pushing the country's economy to a worse situation -- he said that the Sebon is working on various plans like CDS draft and Mutual Fund Act.
Poudyal was of the view that the shares of various financial institutions are still over-priced. "Unlike earlier, the supply has gone up," he said adding that the Initial Public Offerings (IPOs) worth billions have been flooded the Nepse, the sole secondary market in the country pulling the Nepse down. The Nepse had a record hit of 1175 points before it started falling -- especially after the Maoist-led government's budget in September.
The investors are under tremendous fear that government might start inquiry on their income source after Inland Revenue Department has asked the Nepse to provide a list of large investors. But the new chairman tried to assure investors that "there will be no such inquiry".
Shares to flood
KATHMANDU: The Sebon has approved shares worth billions. The IPOs, rights shares, debentures and bonus shares add up to Rs 8 billion. The IPOs in pipeline are Rs 370 million IPO of Sunrise Bank, Rs 300 million Citizens' Bank's IPO and Prime Commercial Bank's IPO each, Rs 260 million IPO of Vibor Bikas Bank and Rs 230 million IPO of much-awaited Chilime Hydropower.
The IPOs adds up to over Rs 2.2 billion, whereas Sebon has also approved rights shares worth Rs 3.76 billion, debenture worth Rs 500 million and bonus shares worth Rs 1.17 billion. The Chilime Hydropower -- constructed with the indigenous technology -- has also been long planning to raise Rs 240 million through an equity offering. Chilime had already floated shares -- that are traded at the Nepse floor -- to its employee.
Chilime model is no doubt an example how Nepalis themselves can construct hydro power plant by raising money from the domestic market, if the government has a clear vision of developing the country.
Apart from that Agriculture Development Bank is also planning its IPO amounting to Rs 960 million, the largest ever IPO in the history as the NT's Rs 150 billion worth shares were floated to public under privatisation Act and was not an IPO.