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Thu, March 28, 2024

beed’s take on the market: May Issue

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The Nepal Stock Exchange (NEPSE) benchmark index rose by 302.21 points (+22.28%) to close at 1658.34 points during the review period (March 15 to April 18, 2017). The market witnessed strong recovery as it bounced back by 352.86 points to reach 1709.82 points on April 11. The growth was further supported by news about capital increment plan for insurance companies and speculation on increment of capital for Microfinance companies. Since then the market has seen some correction amidst speculations about political developments. During the review period, except the Manufacturing and Processing sub-index (-0.90%), all the key sub-indices ended witnessed doubt digit growth. The Insurance sub-index (+39.45%) led the pack of gainers with increase in share price of Rastriya Beema Company (+NPR 9250), Prime Life Insurance Company (+NPR 934), Everest Insurance Company (+NPR 855) and Surya Life Insurance Company (+NPR 725). Likewise, the Development Bank sub-index (+31.49%) followed suit as share value of Nagbeli Microfinance (+NPR 1000), NMB Microfinance (+NPR 958), Laxmi Microfinance (+NPR 885) and Swabalamban Development Bank (+NPR 797) increased. Similarly, Finance sub-index (+23.38 %) rose as share value of Seti Finance (+NPR 109), United Finance (+NPR 106) and Goodwill Finance (+NPR 104) went up. The Hotels sub-index (+21.83%) also witnessed significant growth as share value of Oriental Hotel (+NPR 186) and Soaltee Hotel (+NPR 57) increased. Also, the Hydropower sub-index (+20.06%) gained as share value of Sanima Mai Hydropower (+NPR 175), Butwal Power Company (+NPR 165) and Api Power Company (+NPR 132) appreciated. Furthermore, the Commercial Bank sub-index (+ 19.55%) went up as share value of Nepal SBI Bank (+NPR 360), Standard Chartered Bank (+NPR 281) and NMB Bank (+NPR 167) increased. nepse-index-may The Others sub-index (+3.63 %) witnessed marginal gain as share price of Hydroelectricity Investment and Development (+NPR 20) and Nepal Telecom (+NPR 14) rose. Nonetheless, the Manufacturing and Processing sub-index (-0.90 %) declined marginally as share price of Unilever Nepal Limited (-NPR 1200) decreased.News and Highlights In order to expand the reach of ASBA (Applications Supported by Blocked Amount) system to all 75 districts of the country, Securities Board of Nepal (SEBON) has amended Securities Registration Regulation 2073, allowing government owned commercial banks to provide ASBA service to investors. Previously, only public-listed banks could provide such service. Similarly, SEBON has also reduced the maximum application fee allowed to charge for ASBA from NPR 250 per application to NPR 100. Meanwhile, SEBON has also scrapped the 3% fee that it used to receive for the application and reduced the issue manager fee to NPR 10 per application from NPR 20 earlier. NEPSE has come up with news of implementing a full-fledged automated stock trading system by mid-October 2017 as 70% of the software has already been developed. This will allow investors to use an online platform to buy and sell orders and also settle transactions. In addition to current nine Remote Work Stations (RWS), six other RWS have been brought into operation by stock brokers outside the valley in Nepalgunj, Butwal, Narayangarh, Banepa, Biratnagar and Birtamod. As Banking and Financial Institutions (BFIs) are rushing to meet their capital increment plan, the Insurance Board has also directed all insurance companies to increase its paid-up capital by the end of FY 2074/75. As per the fresh directive, life insurance companies will have to increase their minimum paid up capital to NPR 2 billion from existing NPR 500 million while non-life insurance companies will have to increase their minimum paid-up capital to NPR 1 billion from existing NPR 250 million. Meanwhile, all the insurance companies are directed to publish their capital increment plan by three months. In the public issue front, the market witnessed two Initial Public Offerings (IPOs) during the review period where both the issues were of Microfinance companies. Swadeshi Microfinance issued IPO of 300,000 unit shares worth NPR 30 million and was oversubscribed by 122.83 times. After the allotment, the paid capital will reach NPR 100 million from its current capital of NPR 70 million. Similarly, Mahuli Samudayik Microfinance floated 120,000 unit shares worth NPR 12 million. After the IPO, its paid up capital will increase from NPR 28 million to NPR 40million. Outlook The total market capitalisation has increased to NPR 1.9 trillion i.e. almost 85% of GDP, it signifies the level of growth the secondary markets has achieved so far and the level of investor confidence. Moreover recent forecasts made by International Monetary Fund and Asian Development Bank indicate a rosy economic growth of around 5.6% which could further strengthen growth in the long run. The usual fluctuations in the market is a normal phenomenon however investors are advised to invest wisely amidst high speculations on ongoing political development especially the local level elections. Moreover, the market is likely to react strongly on third quarterly results of listed companies which have started to roll out. This is an analysis from beed invest 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. Disclaimer This is an analysis from beed invest 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.
 
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