Nepse market upsurges 142 pc

Nepal Stock Exchange (Nepse) market recorded a rise of 142 percent to Rs. 8.36 billion in the fiscal year 2006/07, compared to previous fiscal year.

According to the Nepse report released on Thursday, prices of shares of the listed companies reached Rs 21.74 billion during the year, which is 8.96 percent rise over the previous year. 

Total market capitalisation of the listed companies grew significantly by 92.53 per cent to Rs 186.30 billion from Rs 96.76 billion a year ago. With a significant rise in share prices of commercial banks and other financial institutions, the total market capitalisation moved northward, says the report.

Although the total number of listed companies remained the same, the number of ‘A’ category companies rose to 66 from 56 during the review period. The value of the listed shares also rose to Rs 21.74 billion, up from Rs 19.95 billion a year ago. It is mainly due to the issuance of bonus shares, rights shares and some initial public offerings.

“Change in capital base requirement for commercial banks mainly contributed to remarkable increase in share prices,” said general manager of Nepse, Rewat Bahadur Karki

He said that while the change raised speculations among investors that banks would issue rights share in a grand way, thereby raising their capital gains, the absence of credit rating agency has also made it easier for misleading the investors.

He also said that present rise in share prices was not founded on solid ground.

Due to the whopping increment in the share prices of banks, financial institutions, hydropower and development bank groups, Nepse index almost doubled over the year, says the Nepse report.

The Nepse market had opened at 386.83 points at the beginning of the fiscal year 2006/07, but by the end of the year, it closed setting historic high of 683.95 points.

However, transactions of government bonds and debentures was not satisfactory. It made transaction of Rs 36.4 million only. Bonds worth Rs 9,250 million were listed in the market for secondary trading.

“Few individual investors, lower rate of return of bond in money market and differential interest rates on institutional and individual income mainly left investors with reduced interest in government bonds,” said Karki.

Talking about future plans, Karki informed that stock trading will be entering into fully computerised automation from August 18. NSEL also plans to introduce internet based trading with the development of necessary software and hardware network.

Karki further said that the timely disclosure of correct information and development of professionalism among the stock brokers were also pressing challenges of Nepse.