SAGAR GHIMIRE
Jan 1: The year 2014 was a mixed bag for stock market. While first half of the year witnessed bull run, the second half underwent some corrections.
The market opened on January 1, 2014 with high optimism and hope among
investors. Such was the rush for stocks that the Nepal Stock Exchange
(Nepse) index climbed to six-year high of 1,083.55 points on July 23.
The benchmark index, however, retreated in the days that followed, to
end the year at 902.33 points on December 31. The market had opened at
770.53 points on January 1. All in all, Nepse logged gains of 131.8
points this year, compared to the jump of 237 points in 2013.
While the euphoria among investors following the successful Constituent Assembly (CA) election and the sweeping victory of the ´market oriented´ parties last year pushed up the market sharply in the beginning of the year, the political impasse due to uncertainty over the promulgation of new constitution took its toll at the end of the year.
The formation of the government under the leadership of Nepali Congress (NC) in February also boosted investors´ confidence. The stock market registered a gain of 50 points alone in the month of February to settle at 826 points on the last trading day of the month.
Riding on high sentiments against the backdrop of positive political development, the buying frenzy investors pour their money into the stock market that pushed the Nepse benchmark index to a six-year high on July 23.
"Most of the listed companies posted sound growth this year, compared to so-so growth last year. Similarly, investors´ sentiment also remained buoyant that helped to lift up the stock mark”t," Pravin Raman Parajuli, CEO of Nabil Investment Banking Ltd, told Republica.
Liquidity surplus in the banking system was also one of the major factors behind growth in the stock market this year. According to the data of Nepal Rastra Bank (NRB), there is a total of Rs 70 billion of fund lying idle in the banking system with BFIs failing to increase their lending. Banks offered loans against share pledges at as low as 8 percent.
The secondary market also made a record this year in terms of daily turnover on July 21, registering daily transaction of the all time high of Rs 1.2 billion. However, daily transaction amount started dwindling in the second half of the year. According to Nepse, average daily turnover stood at Rs 210 million in November, compared to the average daily turnover of Rs 320 million in January.
Stock brokers attribute the fall in transaction amount in the last days of the year to the confusions pertaining to the implementation of Central Depository System (CDS“. "The market was observing a huge flow of money which, however, started declining due to the complex process of getting loans from the banks against the dematerialized shares and the shares that are on the blank transf”r," Narendra Sijapati, former president of Stock Brokers Association of Nepal (SBAN), said.
While the dematerialized form of trading started this year (on April 15) with an aim to completely replace the paper-based trading by October, the failure to bring all the listed companies on board the CDS process, forced CDS and Clearing Ltd to postpone the full-fledged implementation to April 15, 2015“
"Dematerialized form of share trading was supposed to develop the market. However, type of chaos in the stock market is seen in the market in the transition period. Still, the full-fledged operation of CDS will help the growth of the market in the long r”n," Parajuli, who is also the president of Merchant Bankers Association, said.
Shares of the insurance companies remained the most lucrative scrips in the stock market this year. The insurance sub-index jumped by a whopping 1,783 points in the year to close at 3,782.55 points. Analysts say that the prospects of the insurance market, the insurance companies which are under pressure to raise their capital, and supply constraints of insurance scrips are the factors that are luring investors to the sector.
The NRB´s directive to enforce 1 percent ceiling in ´held-for-trading´ for BFIs, however, dealt a blow to the investors, who considered banking regulator´s step as the ´high-handedness´ toward the capital market. The directives of the NRB in the end of the August created panic in the market. In fact, the downfall of the benchmark index began from this point of time“
"The NRB directive was the turning point for the benchmark index which was otherwise on the bullish trend. Despite the government´s attempts to calm down investors, the market continued to plun”e," a veteran investor told Republica, seeking anonymity.
The government, Securities Board of Nepal and NRB had tried to soothe the investor“. "Though the benchmark index started taking a dive from that time, the political disputes seen in the CA in the last four months of the year further deteriorated the confidence of investors which led to fall of the mark”t," the investor added.
Dipendra Agrawal, another stock market investor, underscored the need for entry of real sector companies in the stock market to end dominance of financial sector in the secondary market.
Stakeholders of the secondary market, however, are positive about the prospects of stock market in the coming year. But they say promulgation of new constitution, full-fledged operation of the paper-less trading system, and performance of the listed companies determines whether or not the benchmark index will surpass the all time high of 1,177 points.
source:SAGAR GHIMIRE ,republica,1 jan 2015
Jan 1: The year 2014 was a mixed bag for stock market. While first half of the year witnessed bull run, the second half underwent some corrections.
The market opened on January 1, 2014 with high optimism and hope among
investors. Such was the rush for stocks that the Nepal Stock Exchange
(Nepse) index climbed to six-year high of 1,083.55 points on July 23.
The benchmark index, however, retreated in the days that followed, to
end the year at 902.33 points on December 31. The market had opened at
770.53 points on January 1. All in all, Nepse logged gains of 131.8
points this year, compared to the jump of 237 points in 2013.While the euphoria among investors following the successful Constituent Assembly (CA) election and the sweeping victory of the ´market oriented´ parties last year pushed up the market sharply in the beginning of the year, the political impasse due to uncertainty over the promulgation of new constitution took its toll at the end of the year.
The formation of the government under the leadership of Nepali Congress (NC) in February also boosted investors´ confidence. The stock market registered a gain of 50 points alone in the month of February to settle at 826 points on the last trading day of the month.
Riding on high sentiments against the backdrop of positive political development, the buying frenzy investors pour their money into the stock market that pushed the Nepse benchmark index to a six-year high on July 23.
"Most of the listed companies posted sound growth this year, compared to so-so growth last year. Similarly, investors´ sentiment also remained buoyant that helped to lift up the stock mark”t," Pravin Raman Parajuli, CEO of Nabil Investment Banking Ltd, told Republica.
Liquidity surplus in the banking system was also one of the major factors behind growth in the stock market this year. According to the data of Nepal Rastra Bank (NRB), there is a total of Rs 70 billion of fund lying idle in the banking system with BFIs failing to increase their lending. Banks offered loans against share pledges at as low as 8 percent.
The secondary market also made a record this year in terms of daily turnover on July 21, registering daily transaction of the all time high of Rs 1.2 billion. However, daily transaction amount started dwindling in the second half of the year. According to Nepse, average daily turnover stood at Rs 210 million in November, compared to the average daily turnover of Rs 320 million in January.
Stock brokers attribute the fall in transaction amount in the last days of the year to the confusions pertaining to the implementation of Central Depository System (CDS“. "The market was observing a huge flow of money which, however, started declining due to the complex process of getting loans from the banks against the dematerialized shares and the shares that are on the blank transf”r," Narendra Sijapati, former president of Stock Brokers Association of Nepal (SBAN), said.
While the dematerialized form of trading started this year (on April 15) with an aim to completely replace the paper-based trading by October, the failure to bring all the listed companies on board the CDS process, forced CDS and Clearing Ltd to postpone the full-fledged implementation to April 15, 2015“
"Dematerialized form of share trading was supposed to develop the market. However, type of chaos in the stock market is seen in the market in the transition period. Still, the full-fledged operation of CDS will help the growth of the market in the long r”n," Parajuli, who is also the president of Merchant Bankers Association, said.
Shares of the insurance companies remained the most lucrative scrips in the stock market this year. The insurance sub-index jumped by a whopping 1,783 points in the year to close at 3,782.55 points. Analysts say that the prospects of the insurance market, the insurance companies which are under pressure to raise their capital, and supply constraints of insurance scrips are the factors that are luring investors to the sector.
The NRB´s directive to enforce 1 percent ceiling in ´held-for-trading´ for BFIs, however, dealt a blow to the investors, who considered banking regulator´s step as the ´high-handedness´ toward the capital market. The directives of the NRB in the end of the August created panic in the market. In fact, the downfall of the benchmark index began from this point of time“
"The NRB directive was the turning point for the benchmark index which was otherwise on the bullish trend. Despite the government´s attempts to calm down investors, the market continued to plun”e," a veteran investor told Republica, seeking anonymity.
The government, Securities Board of Nepal and NRB had tried to soothe the investor“. "Though the benchmark index started taking a dive from that time, the political disputes seen in the CA in the last four months of the year further deteriorated the confidence of investors which led to fall of the mark”t," the investor added.
Dipendra Agrawal, another stock market investor, underscored the need for entry of real sector companies in the stock market to end dominance of financial sector in the secondary market.
Stakeholders of the secondary market, however, are positive about the prospects of stock market in the coming year. But they say promulgation of new constitution, full-fledged operation of the paper-less trading system, and performance of the listed companies determines whether or not the benchmark index will surpass the all time high of 1,177 points.
source:SAGAR GHIMIRE ,republica,1 jan 2015
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