The benchmark index started trading at 2887.5 points on Sunday, which is the week’s first trading day in Nepal, happily put 71.43 points by the end of the trading session.

The gain is a positive sign as the stock market faced considerable headwinds in the last week. The Sunday trading session saw plenty of scrips gaining on the first day of trading.

Stock traders traded a total volume of 17,100,333 unit shares which belonged to 231 companies. This trading session was valued at NPR 9.440 billion.

The sensitive index spiked by 2.43 percent to 548.29 points by gaining 13.03 points. This index is the gauge that indicates the performance of Class ‘A’ stocks.

Excepted Mutual fund index, all the sub-indices shot up and posted good gains. The Mutual fund index dipped 0.29 percent while Citizens Mutual Fund lost 0.39 points which amounted to 3.58 percent dip.

The Non-life insurance index was bullish on Sunday’s market as it posted a 424.77 point gain. It was followed by the Manufacturing and Processing index, which gained 299.69 points. Tailwinds propelled the Life insurance index as it gained with 297.71 point increase. 

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On Sunday, Nepse witnessed record transactions of NPR 11.63 billion. These groundbreaking transactions propelled the national stock exchange to the highest per-day rise.

All of the 13 sub-indices in the market experienced growth. The second market witnessed transactions of more NPR 123 million shares which pertained to 217 organizations.

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41.813 million shares of 215 companies were traded in the stock exchange through 147,492 transactions. Despite the total transactions amounting to NPR 14.768 billion, the benchmark index dipped 0.04 percent or 1.200 point fall, settling at 2,815.40.

The index fell 0.06 percent or 0.28 points, ending 503.71 points. Sympathetically, the float index lost 0.13 percent or 0.24 points to 193.43 points.

The biggest loser was microfinance sector. The sector’s index nosedived by 191.69 points or 3.41 percent to 5,435.06 points. This loss was due to Nepal Rastra Bank’s tightening the financial institutions’ secondary market investment rules and regulations.

Earlier this week, NRB curtailed banking and finance institutions (BFI) from investing bin “D” class financial institutions. Microfinance enterprises come under the D class institutions. The Nepali central bank also restricted BFI from short-term stock trading. The BFI sectors are to hold the shares and debentures for a year before trading them.

Tingeing this record turnover was gained experienced by the industries in the hydropower sector. Khani Khola Hydropower, United Modi Hydropower, and Nepal Hydro Developers led the pack of winners.

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According to the CDSCL, the Subsidiary of the Nepal Stock Exchange, users can now check the allotment results of the publicly issued stocks, including the Initial Public Offerings (IPO), on the new website http://www.iporesult.cdsc.com.np.

The complaints from the investors who were unable to check the IPO allotment results of Mahila Laghubitta on Friday have prompted the CDSCL to launch the dedicated website.

According to the CDSCL, the profound pressure of the IPO applicants to see the results impacted the online stocks transaction platforms, including Mero Share and e-DIS.

The new website enables multiple IPO applicants to access the information without facing any hassles.

However, investors said that even the newly launched website is still not accessible easily.

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However, the Nepse Index has witnessed a steep fall as soon as it resumed the operations. The transactions plunged by 25.30 points (2.02%) to settle at 1,226.15 points by 12:24 pm, leading to the suspension of trading for the day.

Around 87 companies have conducted 292 transactions to sell a total of 106,312 shares worth NPR 104.3 million in a trading session of one hour.

Meanwhile, Sensitive Index also plummeted by 5.39 points (1.99%) to settle at 265.67 points while Float Index slumped by 1.82 points (2.06%) to settle at 86.74 points.

ALSO READ: Nepal Bullion Market Incurs NPR 7 Mn Loss

Stockholders of insurance companies have incurred biggest loss in the stock market today.

• Non-life insurance: Plunged by 524.73 points (7.46%) to 6,508.07 points
• Life insurance subgroup: Plunged by 690.31 points (7.45%) to 8,576.39 points

Meanwhile, the trading sub-group has not registered any transactions today.

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Among the listed companies, the Himalayan Bank has witnessed the highest drop in share value of 3% to close at NPR 485.

Nepal Stock Exchange Share Prices

Source: Nepalstock.com

“since most investors are in a wait-and-watch mode and banks and financial institutions are also not fully functional, the market remained southbound,” said Nepal Pujibazar Laganikarta Sangh Chair Radha Pokharel.

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The investors have been on a hunger strike in front of the Nepal Stock Exchange (NSE) demanding the resignation of the Finance Minister Yuba Raj Khatiwada and Nepal Rastra Bank (NRB) Director Chiranjeebi Nepal.

Chairman of the Securities Board of Nepal Rewat Bahadur Karki, NSE Chair Laxman Neupane and Insurance Board Chairman Chiranjeebi Chapagain were among other officials targeted by the investors.

“The promises which the government authorities have been making for the improvement and upliftment of investors for last three-four years have not been fulfilled. We demanded swift implementation of measures to protect the interests of investors, but the government did not pay any attention. As a result, we have started the hunger strike to pressurize the government,” says Koirala, a senior economic journalist.

Koirala alleged that the Finance Ministry failed to bring in reforms in the national stock market situation.

“Finance Minister Yubaraj Khatiwada and the head of other regulatory bodies do not want to expand and improve the financial market because of which, we are now facing forced to go on a hunger strike demanding their resignations,” Koirala adds.

“The veteran economist is himself the Finance Minister. He is well aware of the issues but is acting indifferently. He has been ignoring 1.7 million share investors,” says Sushma Dhungana, one of the investors in the national stock market.

The investors published their 14-point demands calling reformation in the capital market, protection of investors and creating an investment-friendly environment in the country.

The group stands committed to continuing their protests until their demands are accepted.

What does the government have to respond on this? Let’s see!

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As the reports say, Nepal Stock Exchange (NEPSE) has failed to launch the online trading system even after the announcement, almost a year back in July 2017.

Insufficient preparation is being cited as the reason behind not bringing the fully-automated electronic trading system of shares, in the secondary market, to live.

“We are going to introduce the fully-automated online trading system of shares to make the secondary market more systematic, effective and investor-friendly. But it will take a few months more to implement the system,” says Murahari Parajuli, Nepse Spokesperson.

According to Parajuli, it will take few more months to bring the system to a fully operational status, majorly because of some pending issues associated with the software that runs the system.

“Works to launch the electronic trading system are still ongoing. The software that will be used for the online system has 16 components, which include pre-trading, trading, and post-trading provisions. Tests for components like order placements and new listings are being carried out,” he adds.

The announcement related to the introduction of the online trading system in Nepal was made in July 2017, with an intention to replace the existing semi-automated system used for stock trading.

The new system is expected to bring in more investors to buy or sell their shares in Nepali stock market. The system had its initial deadline in mid-November 2017, which did not materialize.

It’s time Nepse should act fast to give a new hope to the country’s trading system and its traders.

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The new regulatory aims to bring in transparency and curb illegal money flow in the trading of precious metals.

The latest decision is coming after the concerned authorities reported irregularities in the sector and sought legal intervention to monitor transaction flow in the sector.

Following this, the National Coordination Committee formed to check money laundering in collaboration with various government agencies proposed to form a regulatory body to check money laundering.

“The committee headed by Finance Secretary recently recommended the government to pick the regulator from among the three agencies— Inland Revenue Department, Department of Revenue Investigation and Department of Commerce and Supply Management. The Cabinet should decide on the regulator,” informed Department of Money Laundering Investigation (DoMLI) Director General Jiwan Prakash Sitaula.

Current Scenario
It’s really surprising to know that Nepali bullion sector lacks a regulatory despite running billions worth transactions in the trading process.

In the current scenario, banks report to Nepal Rastra Bank (NRB) in case of suspicious transactions around Rs 1 million.

“The move to appoint regulator in bullion market aims to implement ‘Know Your Customer’. It would identify people who do gold transactions and monitor those who invest illegal earned money in gold,” says Binod Lamichhane, DoMLI Spokesperson.

How New Regulatory Helps?
According to Binod, the new regulatory also aims to follow recommendations of the Financial Action Task Force (FATF), a global anti-money laundering body.

FATF is basically an inter-governmental agency that mandates effective implementation of regulatory, legal and operational measures to curb money laundering and terrorist financing.

In line with FATF recommendations, the Money Laundering Prevention Act also mandates bullion traders to have records of customers doing Rs1 million or above worth precious metal transactions in a day.

However, FATF’s 2015 study states that criminals use gold as an alternative to move their illegal assets by overcoming the existing regulatory against money laundering activity.

This is a serious concern for Nepal considering the country’s vulnerability to gold smuggling.

According to the statistics, Nepal saw around 3.79 tons of smuggled gold worth Rs 17.01 billion in the last one-and-a-half-year period during July 2015-February 2017. Surprisingly, the value of smuggled gold then was literally 61 percent of the total legally-imported gold during that period.

Considering the statistics and the existing scenario, Nepal would definitely a regulatory that can tackle the illegal transactions in its bullion sector that involves trading of precious metals.

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Recorded at a decline by 2.19 points, the average turnaround stood at Rs 211.25 million during July 22-28, 2018 compared to Rs 291.02 million in the previous week.

On Sunday, the market that opened on a hopeful note of 1193.39 points, slumped lower to close at 1,181.66 points. However, on Monday and Tuesday the market index witnessed a high, resulting in an increase by 12.84 and 4.77 points on both days. Going forward, in the middle of the week the stock market saw a downward curve when the market index fell by 4.92 points and 3.15 points, respectively.

As a result, the stock exchange market slumped to close at 0.18 percent in the overall trading days.

Stockholders observed that the high interest rates charged by Nepal banks led to a decline in the stock exchange numbers. Investors were demotivated by the bank’s high interest rates.

“Investors complained that they were still compelled to pay as high as 15 percent interest rate despite the banks’ assurance to lower the rate following an ease in liquidity position with them in recent days,” revealed a stockbroker.

Performance Across Various Sectors:
According to sensitive index, Group A companies performed relatively low and showed a marginal decrease by 0.46 points to close at 250.96 points. The majority blue chip companies including commercial banks also witnessed a fall in their share process.

Out of 11 trading groups, five reported losses during July 22-28, 2018. Microfinance faced the bigger brunt, losing 20.11 points and totaling up to 1541.5 points. Manufacturing followed next, reporting a loss of 9.31 points.

Hydro-power, development banks and commercial banks also reported losses, recorded at 2.43, 0.95 and 0.06 points respectively.

Talking about the winners, hotels climbed higher by 38.54 points, followed by trading by 0.42 points, and finance companies by 0.33 points.

Recently, the Nepal Stock Exchange separated life from non-life categories in the insurance group, both of which reported a closing total of 5,942.18 points and 5,904.76 points.

In the banking sector alone, Nabil Bank Limited was leading in terms of transaction amount. The company earned a turnover on shares worth Rs 53.03 million. Nepal Investment Bank stood second after displaying a turnover of Rs 38.88 million. This was followed by Nepal Credit and Commerce Bank, Nepal Bank Limited and Samina Bank.

Mega Bank Nepal witnessed the largest transaction volume in terms of number of shares with a total of 137,000 its shares traded during the review period.

During the last week, stock of 179 listed companies were traded. With the fall in market index, the transaction amount also observed a fall by 27.41 percent to close at Rs. 1.05 billion. The traded number of shares also declined to 3,945,760 units from a previous statistic of Rs 4,754, 520 units.

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According to data compiled by the Securities Board of Nepal, the average daily turnover of securities in the secondary market at the Nepal Stock Exchange (NEPSE) has recorded a growth of over 26 percent from Rs 706.6 million in 2015/16 to 892.7 million in the current fiscal year.

The record growth is being attributed to the introduction of the dematerialized share trading system that was introduced in January 2016. Market analysts including Anjan Raj Poudyal, former president of Stock Brokers Association of Nepal (SBAN) are of the opinion that quicker trading and settlement of shares is now possible following the full-fledged implementation of the dematerialized share trading.

Analysts also ascribe the rise in the turnover to the cheaper funds in the stock market, that could be channelized due to the excess liquidity in the banking system. Growing awareness of the stock market operations and the capital market in particular has encouraged the entry of new investors and led to the increase in the market liquidity.

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