During the review period of October 27 to November 21, 2019, the Nepal Stock Exchange (NEPSE) index went down by 28.74 points (-2.50%) to close at 1120.60 points. Impressive return declaration by few commercial banks have somewhat managed to hold the market demand nonetheless overall market sentiment remains fairly low. Further, the restructuring of the cabinet of ministers, which stands as a major move in the market, also seems to have had no effect on the overall investment sentiment. Since the total market capitalisation of the banking stocks is the highest on NEPSE (58%), it has been somewhat reflected in the market volume. The total market turnover during the period rose by 22.02% and stood at Rs 4.78 billion.
During the review period, contrary to the previous period, all of the sub-indices landed in the red zone. The Manufacturing & Processing sub-index (-6.39%) was the biggest loser as share value of Bottlers Nepal (-Rs 174) and Shivam Cements (-Rs 83) went down. Hydropower sub-index (-4.55%) was second in line with decrease in the share value of Chilime Hydropower (-Rs 64) and Butwal Power (-Rs 21).
Similarly, Non-Life Insurance sub-index (-3.74%) was also in the losing side with fall in the share value of Rastriya Beema Company (-Rs 184) and Prudential Insurance (-Rs 60). Finance sub-index (-3.32%) also faced a drop in the share value of United Finance (-Rs 8). Following this, Hotels sub-index (-3.22%) saw a decrease in the share value of Orientals Hotels (-Rs 65) and Taragon Regency Hotel (-Rs 25). Life Insurance sub-index (-2.71%) also declined with decrease in the share value of National Life Insurance Company (-Rs 31) and Life Insurance Company (-Rs 30). Commercial Bank sub-index (-2.41%) also saw a downfall with the fall in the share value of Prabhu Bank (-Rs 39) and Nabil Bank (-Rs 28). Others sub-index (-2.04%) followed suit with slump in the share value of Citizen Investment Trust (-Rs 65). Development Bank sub-index (-1.75%) also shed value with significant decrease in the share value of Mahalaxmi Bikas (-Rs 39) and Miteri Development Bank (-Rs 10). Besides, Microfinance sub-index (-6.39%) also witnessed a plunge in the share value of Mero Microfinance (-Rs 146).
News and Highlights
Lately, there has been a rise in issuance of debentures by financial institutions aided by the provision in the monetary policy. Apart from private commercial banks, “C” class financial institutions and government owned banks have started to issue debentures. Goodwill Finance is moving to issue ‘12% Goodwill Finance Limited Debenture 2083’ worth Rs 250 million with 12% interest yield for seven years. Likewise, Nepal Bank is going to float ‘10% Nepal Bank Debenture 2083’ worth Rs 2.5 billion with a maturity period of 7 years with 10% annual interest yield. Also Agricultural Development Bank is in the process to issue debentures under ‘10.35% ADBL Rinpatra 2083’ worth Rs 2.5 billion providing 10.35% interest rate for 7 years.
In the public issue front, SEBON has approved Initial Public Offering (IPO) of NMB Laghubitta of 2,430,093 equity shares worth Rs 243 million. Sunrise Capital has been appointed as its issue manager. ICRA Nepal has assigned [ICRANP] IPO Grade 4 rating to the issue, indicating below average fundamentals. Similarly, Sunrise Capital has floated its first mutual fund scheme named Sunrise First Mutual Fund Scheme with 10 crore units of fresh equity shares. Care Ratings Nepal has assigned Fund Management Quality Rating (FMQR) AMC 3, which means “adequate assurance on management quality of Assets Management Company (AMC)” to the company.
Likewise, SEBON has added IPO issue of Himalayan Hydropower of 2,250,000 shares worth Rs 22.50 million to its pipeline. Janata Capital Limited has been appointed as the issue manager. ICRA Nepal Limited has assigned a [ICRANP] IPO Grade 4 for the issue.
Citizens Bank Debentures named ’10.25% Citizens Bank Rinpatra 2086’ with 25 lakh units of debentures at par value of Rs 1000 per unit has also been added to SEBON’s pipeline. The total value of the issue is estimated to stand at Rs 2.50 billion (USD 22.18 million). Global IME Capital has been appointed as its issue manager.
Outlook
Investors’ confidence continued to remain low throughout the review period. Apart from the secondary market, the primary market is also witnessing low investor participation. For instance, the primary offering of hydropower companies have come under significant pressure as reflected by their under subscription and significant price drop in the secondary market. Measures such as annual dividend announcements from previous fiscal year and first quarter earnings results published by listed companies mostly Commercial banks have helped in giving some respite to investors, but apart from putting a short halt to the persisting downtrend, no significant improvements have happened. The market is likely to continue with current trend until improvements in market liquidity and volume.
This is an analysis from beed management pvt. 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.
