beed’s take on the market – november issue 2017

The Nepal Stock Exchange (NEPSE) benchmark index rose by 28.54 points (+1.85%) to close at 1,568.35 points during the review period (September 20 to October 18, 2017). The secondary market witnessed a bumpy month; market dropped up to 1,501.89 points on October 9 however, the market bounced back soon with positive political developments with the announcement of election dates for the federal parliament and provincial assemblies that is to be held after a month. During the review period, majority of the sub-indices landed in green zone while Manufacturing and Processing sub-index (-2.28%) and the Development Bank sub-index (-0.15%) closed on a negative note. [caption id="attachment_5021" align="alignright" width="391"] Source: Nepal Stock Exchange Ltd.[/caption] The Others sub-index (+9.44%) led the pack of gainers with the increase in share price of Nepal Telecom (+NPR 80). Likewise, the Hydropower sub-index (+5.24%) followed suit as share value of Chilime Hydropower (+NPR 121), Butwal Power (+NPR 22) and Ngadi Group Power (+NPR 14) increased. Similarly, Hotels sub-index (+3.87%) rose as share value of Oriental Hotel (+NPR 23), Taragaon Regency Hotel (+NPR 19) and Soaltee Hotel (+NPR 15) went up. The Insurance sub-index (+1.61%) increased with the increase in share value of Rastriya Beema (+NPR 500), Surya Life Insurance (+NPR 114), Nepal Insurance (+NPR 96) and Prudential Insurance (+NPR 75). Similarly, the Commercial Bank sub-index (+1.35%) gained as share value of Standard Chartered Bank (+NPR 39), Everest Bank (+NPR 34), NIC Asia Bank (+NPR 30) and Nabil Bank (+NPR 23) increased. Furthermore, Finance sub-index (+0.73%) went up with the increase in share value of Janaki Finance (+NPR 13) and Manjushree Finance (+NPR 6). Nonetheless, the Manufacturing and Processing sub-index (-2.28%) went down with the decrease in share values of Bottlers Nepal (Terai) (-NPR 316) and Himalayan Distillery (-NPR 173). Also, the Development Bank sub-index (-0.15%) toppled as share value ofJanautthan Samudayic Microfinance (-NPR 129), NMB Microfinance (-NPR 93) and Womi Microfinance (-NPR 81) declined.

News Highlights

In order to help small and long term investors in the secondary market, the Nepal Capital Market Investors Association has come up with a 13-point list of demands. The Association has requested Securities Board of Nepal (SEBON) to formulate policies accordingly. Some of these demands include waiving capital gains tax for long term investors, implementing fully online trading, providing broker license to commercial banks and establishing a minimum of 10 brokerage firms in each of the seven provinces. Meanwhile, the President of the association argued that the regulator needs to coordinate with banks to grant loans to the small investors since banks were reluctant to provide loans to small investors willing to invest in shares. On the public issue front, the market witnessed two Initial Public Offerings (IPOs); Support Microfinance and Siddhartha Equity Fund. Support Microfinance had issued IPO of 180,000 unit shares worth Rs 18 million at face value of Rs 100 per share. Likewise, Siddhartha Equity Fund had floated a closed-end 10-years equity oriented mutual fund scheme of 120 million shares worth Rs 1.2 billion with face value of NPR 10 per unit. ICRA Nepal had assigned IPO grade 3+ to Siddhartha Capital Limited in July 2017 indicating adequate assurance on management quality. [caption id="attachment_5022" align="alignnone" width="900"] Source: Nepal Stock Exchange Ltd.[/caption]

Outlook

Oversupply of shares due to listing of new bonus and right shares has decreased the charm of shares of banks and financial institutions. Further, because of the festive season, the trading volume has decreased substantially by 61% during the review period. However, as the liquidity position of the banks have improved in recent days, interest rates charged by BFIs is expected to come down in the coming period which is expected to boost the capital market. Meanwhile, as economic activities accelerate post festivities savvy investors expecting to buy at bargain prices is expected to increase which is likely to strongly rebound the market. 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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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.