Money

‘Interest rate war’ sinks Nepse

- Rajesh Khanal, Kathmandu
Stockbrokers attributed the downturn in Nepse to a drop in investors’ confidence as they expect the liquidity position of banks to deteriorate even further

Dec 9, 2018-Nepal Stock Exchange (Nepse) last week shed 27.52 points to close at a three-year low of 1,120.84 points, as banks geared up for an ‘interest rate war’ to address the shortage of loanable funds.

The market continued to experience heavy selling pressure, resulting in a daily turnover of Rs445.63 million compared to Rs303.89 million in the previous week. 

The secondary market that opened at 1,148.36 points on Sunday slipped 17.47 points to close at 1,130.89 points. On Monday and Tuesday, the market gained 0.84 points and 10.53 points respectively. On Wednesday, the market plunged 24.07 points after a number of banks offered interest rate on fixed deposit as high as 13 percent per annum. 

Citing the heavy downfall in the market index, the Finance Ministry formed a high level committee to address the ‘interest rate war’ on Thursday, which buoyed the market into gaining 2.65 points.

Consequently, the market closed with a downfall of 2.39 percent in overall trading days during the review period.

Stockbrokers attributed the downturn in Nepse to a drop in investors’ confidence as they expect the liquidity position of banks to deteriorate even further. “At a time when investors are facing hassles to invest in secondary market with problems in the online trading platform, the interest rate war has dropped investors’ confidence even lower,” said a stockbroker under condition of maintaining anonymity.

The sensitive index that measures the performance of Group ‘A’ companies also declined by 5.82 points to close at 238.33 points with a downswing in the sub-indices of almost all of the groups in the trading list.

With a fall in the market index, the average value of the shares listed in the stock market also declined Rs32.81 billion, as the market capitalisation fell to Rs1,337.04 billion from Rs1,369.85 billion.

Except for the sub-index of trading, the remaining indices landed in the red last week. Non-life insurance lost the most of 182.59 points to close at 4,948.66 points. 

It was followed by life insurance (124.04 points), microfinance (57.99 points), hotels (49.19 points), manufacturing (46.08 points), hydropower (42.75 points) and development banks of 34.29 points. Similarly, the index of commercial banks also slid by 20.61 points, ‘others’ by 15.83 points and finance companies by 5.99 points. 

Trading gained 1.27 points to close at 238.62 points.   

Last week, stocks worth Rs2.22 billion were transacted, which was 47.01 percent more than the transaction amount in the previous week. The total number of traded shares also increased to 7,347,318 units from 5,081,141 units.

Published: 09-12-2018 08:52

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