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June, 2002 |
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Stock Taking |
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May
Movement The stock market had revived last month (April) little bit rising from below 200 in March, the Nepse index reached highest of 243.63 on 8th May, 2002, (the table depicts the movement and investors psychology). It is obvious that the month of May has been very positive for the stock prices. During the whole month of April Nepse increased by almost 19 points. That was a record but it got broken during the first week itself of May when Nepse increased by almost 22 points reaching 243.63 on 8th May and this is the highest point reached after it started falling last year. Similarly, 8th May also saw the highest number of transactions, the highest amount of trading as well as market capitalization. The market was falling little bit after that and Nepse came down to 230, but again it got momentum and Nepse was around 241 on May 20. However it again plunged to 213 on May 28.. There are indications that shareholders have their faith in financial institutions of Nepal as the major changes have been due the change in the prices of banking sector and some of the finance companies. Standard Chartered Bank Nepal reached to Rs. 1650 per share from almost 1000 in March. On an average there had been almost 30 per cent rise in the share prices of banks and almost 20 per cent in some selected finance companies. The one possible reason for the positive mood was the success of security forces over the Maoist rebels. But the fact that economy will take much longer time to recover will restrict the upward movement of share prices in the month ahead. As such, buyers have to be careful before investing in big way even in blue-chip companies. The days immediately after the dissolution of the lower house of parliament have caused some anxieties and NEPSE has fallen down. This too reinforces the logic of being careful. Indecisiveness
of Boards Nepal Dhitopatra Board is the regulatory body and Nepal Stock Exchange Ltd. the only market for share trading in Nepal. One of the primary functions of both these institutions is to develop the share market in the country. But except carrying out the regular functions, neither of these institutes has been able to play a role of the catalyst in the promotion of the share market. A new law on stock exchange is long overdue. The authorities used to say last year that the new law would be implemented after approval from the parliament. But the law is not ratified by parliament as yet. Perhaps this is enough to prove the ineffectiveness of these institutions because they cannot pursue the bills. The other major issue that the private sector has been raising for the last two years is a demand for opening up the brokers market for the newcomers. The country has adopted the liberal economic policy. But this principle does not apply in this market. A year ago the Board of Directors of Nepal Stock Exchange had formed a committee headed by one of the directors, which had submitted the report, which basically suggested to open the license in order to induct more quality brokers in the market. Why was the committee formed if the report was not to be put for implementation at all? It is heard that again a committee is formed at Nepal Stock Exchange to study this matter further. The other
important aspect that both of these institutions are neglecting is
regarding the flow of information to the shareholders. The officials
have made series of foreign visits exploring how stock exchanges operate
in different countries. But there has not been any significant change in
the mode of the operation of Nepse over the last 10 years. It uses the
same out cry system, it takes four months time for the investor to
receive the certificate, there is no viewers gallery for investors nor
access to online trading, neither is there any informative website. Primary
Market The primary
market for the stocks has been closed for last three months. The last
call was for the Development Credit Bank, which has now distributed its
share certificates. Authorities had promised that many finance companies
and some banks were coming to the market, but they have not. Again the
reason forwarded is the current security situation. But why are not the
finance companies, which are compelled by law to go to the public,
coming to the market. Out of 52 finance companies only 27 are listed in
the stock exchange. The companies with good results will always fare
better. Especially financial institutions are always fared well in our
market. Even Nepal Development Bank has been selling at Rs. 190. Lastly, Last month’s article under this column (Proxy Business, NBA May 2002), which dealt mainly on NIDC Capital Market, created a havoc in the company’s management. The author believes in his analysis and conclusion that “it will be the first finance company to fail if present circumstances continue”. If this conclusion is baseless, the management has nothing to worry. But if it is likely to be correct, they better start seriously to develop a strategy to avoid such eventuality. Emergency
& Stock Exchange Perhaps it is only a coincidence or there may be some cause and effect relationship as well, but it seems that Nepal Stock Exchange has started showing sensitivity to developments outside the market. The NEPSE Index fell 5.75 points to 235.88 on May 23 following the dissolution of the parliament on the previous night in preparation to extend the state of emergency. Almost similar sensitivity was shown also when the state of emergency was declared on November 26, 2001 or when the parliament had extended the emergency on February 25, 2002. NEPSE was 296.01 on November 26, 2001, the day the nationwide state of emergency was declared and it fell to 283.98 on November 27, losing 2.03 points, though it gained to 288.83 on November 28. On February 25, the day the parliament was extending the state of emergency, NEPSE was 225.11. It fell to 223.46 on February 26 and further down to 222.45 and 220.28 on 27th and 28th. Such a clear market sensitivity was very rarely experienced in the past, say market observers. Weekly
Movement in NEPSE (May 2002)
Financials
of Some Commercial Banks
For
the quarter ending on 14 April, 2002 Forthcoming Public Issues
Note:
Information on this page are indicative. Though utmost care is taken to
ensure accuracy, the readers are advised to reconfirm with the concerned
agency before making any decision. Share
Price in Nepal Stock Exchange
Latest State of Nepali Economy (Nine months ending on mid-April of each year)
Source
: Nepal Rastra Bank World
of Statistics
Households with Consumer Durables Total
No. of Households
4,174,000
% of total families Total
No. of Households with radio sets
2,229,000
53.40% Total
No. of Households with TV sets
993,000
23.80% Total
No. of Households with telephone lines
264,000
6.33% Total
No. of Households with bicycles
1,358,000
32.50% Total
No. of Households with motorcycles
312,000
7.47% Total
No. of Households with motor vehicles
81,000
1.94% Total
No. of Households with refrigerators
250,000
5.97% Total
No. of Households with other transport
55,000
1.33% Source : Population Census 2001, Central Bureau of Statistics |
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