High interest rate puts off investors

- RAJESH KHANAL, Kathmandu

Feb 17, 2019-

Nepal Stock Exchange (Nepse) last week plunged 26.7 points to close at 1,112.87 points, as the high interest rate continued to affect investors’ confidence at a time when a number of listed companies posted healthy profits in the first half of the current fiscal year.

Despite a fall in the market index, the average daily turnover almost doubled to Rs607.47 million compared to the transaction amount in the previous week. The significant amount of turnover appeared on the backdrop of offloading the promoters’ shares of Everest Bank held by BK Shrestha and his family members. The central bank has barred members of a single family from owning more than 15 percent of the listed company’s promoters’ shares.  

The secondary market that opened at 1,139.57 points on Sunday slid 12.04 points on the first trading day to close at 1,127.53 points. On Monday, the market gained 1.33 points, before going down by 0.67 points, 7.11 points and 8.21 points on Tuesday, Wednesday and Thursday respectively.  

In overall trading, the market eventually declined by 2.34 percent over the review period.

Stockbrokers blamed the situation to the exorbitant interest rate being charged by banks. “Investors are in a wait and watch mode as the banks are still holding the interest rate at a high level despite reducing their base rate,” said a stockbroker under condition of maintaining anonymity.

The sensitive index that measures the performance of blue chip companies also declined 5.7 points to close at 236.91 points with a fall in majority of the trading sub-indices.

With the market experiencing a slump, Rs32.19 billion was wiped out of the market, as the market capitalisation fell to Rs1,358.44 billion from Rs1,390.63 billion.

Of the trading groups, life insurance lost the largest of 250.54 points and closed at 5,581.94 points. The Nepse of non-life insurance also dropped 182.31 points.

Indices of hydropower and microfinance also fell significantly, losing 37.42 points and 36.78 points respectively. Similarly, commercial banks, development banks and ‘others’ also lost 21.01 points, 19.9 points and 17.94 points respectively. Hotels and finance companies, with a downfall of 9.59 points and 6.57 points, were among the losers.

Of the two gainers, manufacturing added 35.94 points and the index of trading inched up 0.17 points during the review period.

Regarding the individual companies, promoters’ shares of Everest Bank posted shares transaction worth Rs1.91 billion, the largest of all. It was followed by Upper Tamakoshi Hydropower, Prabhu Bank Limited, Citizen Investment Trust and Nepal Credit and Commerce Bank.

Last week, stocks worth Rs3.03 billion were transacted, almost double of the transaction volume in the previous week. The total number of traded shares also increased to 11,224,052 units from 5,103,596 units.

Over the review period, Nepse listed 7,911,281 units of NCC Bank’s right shares and a total of 8,364,995.66 units of Janaki Finance, Nirdhan Utthan Laghubitta Bittiya Sansthan, Western Development Bank and Muktinath Bikas Bank.

Right Shares/Bonus Shares

Company    Type    Units

NCC Bank    Right     7,911,281

Janaki Finance    Bonus    887,446

Nirdhan Utthan Laghubitta Bittiya Sanstha    Bonus    2,000,000

Western Development Bank     Bonus    747,561.6

Muktinath Bikas Bank    Bonus    4,729,968.06

Published: 17-02-2019 11:59

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