Nepse posts three historic records, all-time high index, largest turnover and highest number of transaction

 It seems coronavirus crisis has not any negative impact on domestic market as the Nepse index went up by 0.98 per cent or 18.43 points to close at 1,893.24 points – the highest in the history – today. The previous highest close was 1,881.45 on July 27, 2016.

Though the Nepse index scaled as high as 1,926.91 points – during the intraday session today – it settled to close at 1,893.24 points also with the highest turnover of Rs 7.61 billion, which is also the record turn over in the market till date. Likewise, the secondary market witnessed some 17,188,099 shares of 201 listed firms are traded through 70,003 transactions, which is also the highest number of transactions in a single trading day, today the last trading day of the week.

Since the banks and financial institutions are flushed with lonable liquidity, and there is no other investment opportunity in the market due to coronavirus induced slowdown in economy, the investors have been putting their money on share, according to the analysts. “The change in guard in the Finance Ministry has also played the catalyst to push the share market up,” they claimed, as the incumbent finance minister Bishnu Prasad Poudel is considered market friendly, compared to his predecessor Dr Yuba Raj Khatiwada. 

The float index gained 1.45 points and closed at 128.54 while the sensitive index closed at 365.18 points after gaining 2.85 points, according to the Nepse, that is yet dominated by the banks and financial institutions. The banking index gained the most 2.7 per cent helping to push the Nepse up.

Nepal Reinsurance Company (NRIC) has the highest individual scrip turnover of Rs 581.3 million, whereas the shares of Prabhu Bank (PRVU) was the highest trading today. Likewise, four companies that hit the 10 per cent positive circuit today are NMB Laghubitta Bittiya Sanstha (NMBMF), Panchthar Power Company Ltd (PPCL), Himalaya Urja Bikas Company (HURJA), and Ankhukhola Hydropower Company Ltd (AKJCL).

The Salt Trading Corporation (STC) has however lost the most at 6.18 per cent. The trading index lost the most at 5.33 per cent.

The the Nepse index and gross domestic production (GDP) has had the positive correlation in the past years, it seems to have the negative correlation this fiscal year. In the past years, the Nepse has recorded highest when the GDP also posted high in the respective fiscal years. But this fiscal year, the GDP seems to be hovering between 0 to 2 per cent, according to the projections from multilateral development partners including Asian Development Bank (ADB), World Bank (WB) and International Monetary Fund (IMF), and also the Central Bureau of Statistics (CBS), and National Planning Commission (NPC).     

DATES TO REMEMBER
The lowest index level was on June 15, 2011 – 292.00
The highest index was on July 27 2016 – 1,881.45
The lowest Index level on March 3, 2019 – 1,100.58
The highest index is on today, Nov 26 2020 – 1893.25

Nepse index looks up to break all-time high record

 Though, the economy is not doing well due to coronavirus-induced lockdown for almost 4 months and subsequent prohibitory order, the share market has been looking up to break one or the other record every day.

Just a couple of days ago, the secondary market recorded the historic turnover of almost 7 billion in a day, and today the market almost broke its 4 year old all-time high record of 1,881.45 points. The Nepal Stock Exchange (Nepse) index – the share market indicator – gained a whopping 64.98 points today to close at 1,875.10 points, almost 7 points less to break the all-time high record. However, this is the third-highest close in the history of Nepse. The index is only 6.35 points away from the all-time high of 1,881.45 points maintained in the previous bull cycle 4 years ago, also due to no investment option for the investors and high liquidity in the banking system due to pandemic, according to the market analysts.

The Nepse index today – the fourth day of the trading – opened at 1,820.87 points and witnessed some 18,846,181 shares exchange the hands through 42,151 transactions. The trading of 196 scrips brought the total turnover to a little over Rs 6.81 billion, which is also the second-highest turnover in Nepse history, second only to the record maintained last week.

Likewise, the float index also gained 3.81 points to close at 127.13, while the sensitive index closed at 362.33 after gaining 12.96 points in a day’s trading. “Neco Insurance Promoter has the highest individual scrip turnover of Rs 422.9 million,” according to the Nepse.

According to the classical definition, the share market is the mirror of economy, but domestic share market also broke the classical definition of share market being the mirror of economy as the Nepali economy is doing poorly. However, the economic growth – measured by Gross Domestic Production (GDP) – and domestic share market – measured by Nepse index – has positive correlation till now. This fiscal year, the domestic share market might break that also.

Share market creates history with highest turnover of Rs 6.11 billion in a day

 Though, the economy is in tatters due to global corona crisis, and the political situation has also not been looking good due to intra-party fight in the ruling Nepal Communist party (NCP), the share market – that is considered a barometer of economy – has been creating record trasactions everyday.

The Nepal Stock Exchange (Nepse) – that has started looking up since the appointment of new finance minister Bishnu Poudel – went up by 2.08 per cent or 36.32 points to land at 1,778.12 points today. Not only it looked up today, Nepse also witnessed the historic record turnover of Rs 6.11 billion through trade of14, 062,507 units of shares of 198 listed firms with 56,341 transactions.

The share market is rejoicing after the ouster of the earlier finance minister Dr Yuba Raj Khatiwada, who has been appointed Nepal’s ambassodar to the US, market analysts claimed, adding that the secondary market has been in ‘wait and watch’ mood due to Khatiwada’s share market unfriendly behaiviour.

The new finance minister is open and share market friendly, the market analysts said, adding that the market expects the finance minister to be more flexible towards secondary market. 

The market today witnessed a positive circuit break in first hour of the trading time, whereas the sensitive index also went up by 1.47 per cent or 4.98 points to close the market at 343.07 points. Likewise, the float index also increased by 1.58 per cent or 1.58 points to close the market at 120.99 points today. Among all the subgroups, the trading subgroups increased by 9.94 per cent or 198.4 points to close at 2,193 points and hotels subgroup has hiked by 9.38 per cent or 181.63 points to close at 2,118.59 points.

Similarly, manufacturing subgroup increased by 5.64 per cent or 204.73 points to 3,833.87 points and others sub-index rose by 4.43 per cent or 58.15 points to 1,370.69 points.

Nepal Infrastructure Bank to float Rs 8 billion worth shares to public

 Nepal Infrastructure Bank – established as the first and only infrastructure development bank of the country – today during its second annual general meeting (AGM) – approved the proposal to issue Initial Public Offering (IPO) of 80 million units of shares worth Rs 8 Billion to public calculated at 40 per cent of the issued capital, after obtaining the approvals of the regulators.

Chaired by Anuj Agarwal, who is also the chair of the bank’s Board of Directors (BoD), unanimously approved the director’s report of fiscal year 2019-20 and the bank’s financial statements of last fiscal year. The bank’s board members Shreekrishna Nepal, Chandra Prasad Dhakal, Lal Mani Joshi and Ramkrishna Khatiwada were also present in the meeting. Likewise, bank’s chief executive officer Anil Gyawali, deputy chief executive officer Bhupendra Pandey and other senior officials were also present in the meeting.

In order to safeguard from risks of Covid-19, the banks’ shareholders had been given an option to participate in the meeting through online platform. Arrangements had also been made to fully comply with the health and safety standards for participants, who were physically present in the meeting.

The bank, established with the objective of investing into infrastructure development projects only by raising long term resources within Nepal and from abroad, has approved loans of Rs  6 billion to five projects in hydro-electricity, cement Clinkerisation and solar energy sectors and disbursed loan of Rs 500 million during the last fiscal year 2019-20, and further approved loans of Rs 2.85 billion in additional  three projects after the review period in current financial year resulting total approved loans of Rs 8.85 billion, according to the bank.

Stock brokers can float margin lending

The Securities Board of Nepal (Sebon) has allowed stock brokerage firms to provide margin lending. The stock brokerage firms – currently allowed only to execute trading orders placed by their clients in the secondary market – will be able to provide marging lending to their investors to buy shares.
Issuing a circular today the regulator for the capital market – Sebon directed the Nepal Stock Exchange (Nepse) and brokerage firms – paved the way for brokerage firms to provide financing service to purchase stocks for their clients in the secondary market. "The interest rates will however be monitored by the Sebon and Nepse," the circular reads, adding that the brokerage firms will be free to set their interest rates on the margin loan but the interest rates should be mentioned in the contract. "The firms should also pre-inform Nepse and Sebon about the interest rates."
A panel formed by Finance Ministry last month has recommended margin lending by stockbrokers to address problems in the stock market. Margin trading allows investors to buy shares by borrowing money against stock as collateral. Investors need to have a margin account with a brokerage firm – to trade on margin – while the stockbrokers can fix the interest rate on such loans.
According to the Securities Board’s directive issued last year, stockbrokers with a net asset of Rs 50 million can offer margin trading service to investors. "Stockbrokers can issue margin loans amounting up to 50 per cent of the value of the shares based on the 180-day average price or the prevailing market price, whichever is lower," the directives read, adding that a potential investor has to deposit up to 50 per cent of the value of the stock to be purchased while the rest of the money is put up by the stockbroker.
Of the total 50 stockbrokers in the country, all are eligible to provide margin loans, according to the Stockbrokers’ Association of Nepal president Bharat Ranabhat.
It took the capital market regulator a year to finalise working procedure for implementation of the marging lending service also due to complication about who will monitor the interest rates, though the Sebon had first mooted the idea to introduce margin lending service from brokerage firms in November 2017.
Though the Nepse had drafted the working procedure on margin transaction service last May in line with a Sebon directive of November 2017, it could not be issued  due to disagreement between the Sebon and central bank – that is responsible for monitoring interest rates – over the issues of jurisdiction to monitor the interest rates.
Earlier, the central bank had said that the brokerage firms that wanted to provide margin lending service should get permission from the central bank, which is the regulator of financial sector. The Sebon has however informed the new arrangement including the working procedure and its earlier directive to the central bank.
The margin lending facility from brokerage firms will make the investors free from relying on bank and financial institutions (BFIs) for loans to buy stocks in the secondary market.

Market adds more stocks but trading, transaction less

The secondary market has added some 23,58,156 units of bonus shares of Bank of Kathmandu and 10,12,500 units of rights shares of Life Insurance Corporation this week, though the market witnessed some 3.59 million units of stocks trading worth Rs 1.45 billion compared to 5.37 million units worth Rs 2.27 billion a week ago.

Of the four days transaction at the Nepal Stock Exchange (Nepse) – due to a public holiday on Monday – the market lost three days and gained only one day to close the market at 763.47 points – losing 23.89 points – from the opening of 787.36 points.

Nepal Bangladesh Bank led the market in terms of transaction amount with Rs 132.76 million, and Nabil Balance Fund topped the market with largest unit transaction with 392,542 units, and Mega Bank with 948 trading witnessed the highest number of trading in the week.

NMB starts online share application

Good news for share investors !

Soon it will be possible for them to apply for the primary issue from their own homes.
"The days of long queues to apply for primary issues will soon be a thing of past," said Upendra Poudyal, CEO of NMB Bank Ltd, launching his bank's online share application service -- NMB e-Solutions: NMB online share application -- here today.
NMB Bank has come up with the first step in the online share application system. "An investor can now file profile online and need not fill up any applications," he said adding that it will also help save investors time and energy everytime a primary issue is floated.
However, for the time being as Securities Board of Nepal (Sebon) has not brought an online share application regulation one has to follow some procedure manually as usual, such as registration.
"Once an investor files his/her profile online, he/she will get a slip with ID code -- easily printable -- and can register at the privileged counters with mandatory documents like photos and xerox copies of citizenship certificate and pay the amount equal to the number of shares sought," CEO Poudyal added.
However, it will definitely take some time to go to complete electronic application system for shares. "Some changes in the regulatory framework of the Securities Regulation and greater awareness among investors could help go for complete electronic system of application for shares in the future," he said, "NMB Bank will improve the service gradually and go completely electronic," Poudyal assured. "While it is our initiative to start online share application, I feel other issue managers will also follow suit to make the share application process easier."

The Nepali capital market has seen tremendous growth in the last one decade. The sole secondary market has been automated and the number of investors at present is estimated at around 1.5 million. If the complete ectronic share application is implemented by the Sebon, the investors will benefit more and fake applications could be checked.