Tuesday, November 22, 2011

Nepse revises debut price

Nepal Stock Exchange (Nepse) has revised its debutant price rules for the new stocks to kick-start the trading of newly listed shares faster.
According to the new rules, the starting price for newly listed companies can be fixed at a range falling between paid up value of the unit share and three times the paid up value or net worth or three times the net worth, whichever is lower.
According to the earlier rule, the newly listed companies could have debuted at price band between three times to five times the net worth of the company. The rule created difficulty in trading of the shares of newly listed companies as no one was ready to buy the shares of relatively unknown companies at the share price of well established companies.
On the stock market's heydays two years back, the stocks of many companies opened at price higher than Rs 1,000 as the clever investors were able to inflate the price through rumours.
Nepse had stepped in and brought the opening base price band to curb the unnecessary fuelling of share prices. However, at present when the stock prices are going down, the rule is not practical. Nepse needed to revise the rule to stop the suffering of the investors that have purchased the shares through primary issue.

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