Stock investors raked in 20 per cent
returns last year, while prevalent interest rates could not even
compensate for inflation and gold price has regressed.
Share prices have appreciated by 20.86 per cent, based on the difference of last fiscal year’s closing price and the previous years’ closing price. If an investor had bought shares towards mid-July 2012 and sold near mid-July 2013, the investor earned 10 per cent return, even considering the rate of inflation at 10 per cent. Investors are also eligible to get dividends that amounted to Rs 62.45 per unit on average last year.
On the other hand, interest rate in alternate investments such as fixed deposits offered by financial institutions stand at less than nine per cent while projected rate of inflation stands at 9.9 per cent. Likewise, gold —another popular alternate investment instrument in Nepal — actually depreciated in price by more than eight per cent during the review period.
Thus, in the past one year, the capital market seemed to have reclaimed its place as a major investment avenue.
The stock market that went through a bearish period for more than three years since 2008, finally started to recover from April 2012. Share prices at Nepal Stock Exchange had started to look up and were roaring during the whole of fiscal year 2012-13. Among the listed companies that were traded since the beginning of last fiscal, United Finance, Shree Investment Finance and Nepal Bangladesh Bank registered the highest gains in share prices.
Rumours of United Finance’s possible merger with Nabil Bank — for major stake of both financial institutions are owned by members of Chaudhary Group — more than doubled its share price. United Finance’s shares which were being traded at Rs 34 per unit reached Rs 133 at the end of last fiscal year. Likewise, rumours of Shree Investment Finance’s merger with Bank of Kathmandu also pushed the former’s share price from Rs 110 to Rs 284 over a period of a year.
“This year, share prices of many smaller financial institutions have gone up following rumours of mergers,” pointed out share analyst Rabindra Bhattarai.
Share trading of more than two dozen financial institutions have been suspended due to ongoing merger process. Likewise, shares of about one dozen companies have been barred from trading for non-renewal of listing fee, while shares of a few companies are rarely traded.
NB Group’s exit from Nepal Bangladesh Bank also helped the share price of the commercial bank to surge. The promoter group has been accounted for many financial misdoings in the bank and has been allowed to divest from the bank by selling their stake to Bangladesh-based IFIC Bank. Its share price surged to Rs 300 by mid-July 2013, which opened at Rs 121 a year ago.
“This is a classic example of how investors react to corporate governance issues. The belief that the bank will do better has prompted investors to bid for its shares,” said Bhattarai.
“We also witnessed investors bidding more for shares of companies that will be offering bonus shares such as insurance companies,” informed immediate past president of Stock Brokers’ Association of Nepal Anjan Raj Paudyal.
Among the top 20 price jumpers last year, five were insurance companies, one hotel, one hydropower company, one manufacturing company and the rest were financial institutions. However, this year, 52 companies saw their share prices slumping. Share price of Himalayan Finance that has been declared problematic slumped the most.
Top 20 earners
United Finance 291
Shree Investment Finance 158
Nepal Bangladesh Bank 148
Citizen Investment Trust 100
Siddhartha Insurance 92
Machhapuchchhre Bank 90
Nepal Life Insurance Co 82
Nepal Credit And Com Bank 77
Oriental Hotel 75
Maha Laxmi Finance 73
Nirdhan Utthan Bank 71
Sagarmatha Insurance 70
Chhimek Laghubitta Bikas Bank 63
Sunrise Bank 59
Unilever Nepal 56
Everest Bank 54
Nepal Investment Bank 53
Life Insurance Co Nepal 52
Butwal Power Co 44
Gurans Life Insurance 43
Source: Nepse/ THT
Share prices have appreciated by 20.86 per cent, based on the difference of last fiscal year’s closing price and the previous years’ closing price. If an investor had bought shares towards mid-July 2012 and sold near mid-July 2013, the investor earned 10 per cent return, even considering the rate of inflation at 10 per cent. Investors are also eligible to get dividends that amounted to Rs 62.45 per unit on average last year.
On the other hand, interest rate in alternate investments such as fixed deposits offered by financial institutions stand at less than nine per cent while projected rate of inflation stands at 9.9 per cent. Likewise, gold —another popular alternate investment instrument in Nepal — actually depreciated in price by more than eight per cent during the review period.
Thus, in the past one year, the capital market seemed to have reclaimed its place as a major investment avenue.
The stock market that went through a bearish period for more than three years since 2008, finally started to recover from April 2012. Share prices at Nepal Stock Exchange had started to look up and were roaring during the whole of fiscal year 2012-13. Among the listed companies that were traded since the beginning of last fiscal, United Finance, Shree Investment Finance and Nepal Bangladesh Bank registered the highest gains in share prices.
Rumours of United Finance’s possible merger with Nabil Bank — for major stake of both financial institutions are owned by members of Chaudhary Group — more than doubled its share price. United Finance’s shares which were being traded at Rs 34 per unit reached Rs 133 at the end of last fiscal year. Likewise, rumours of Shree Investment Finance’s merger with Bank of Kathmandu also pushed the former’s share price from Rs 110 to Rs 284 over a period of a year.
“This year, share prices of many smaller financial institutions have gone up following rumours of mergers,” pointed out share analyst Rabindra Bhattarai.
Share trading of more than two dozen financial institutions have been suspended due to ongoing merger process. Likewise, shares of about one dozen companies have been barred from trading for non-renewal of listing fee, while shares of a few companies are rarely traded.
NB Group’s exit from Nepal Bangladesh Bank also helped the share price of the commercial bank to surge. The promoter group has been accounted for many financial misdoings in the bank and has been allowed to divest from the bank by selling their stake to Bangladesh-based IFIC Bank. Its share price surged to Rs 300 by mid-July 2013, which opened at Rs 121 a year ago.
“This is a classic example of how investors react to corporate governance issues. The belief that the bank will do better has prompted investors to bid for its shares,” said Bhattarai.
“We also witnessed investors bidding more for shares of companies that will be offering bonus shares such as insurance companies,” informed immediate past president of Stock Brokers’ Association of Nepal Anjan Raj Paudyal.
Among the top 20 price jumpers last year, five were insurance companies, one hotel, one hydropower company, one manufacturing company and the rest were financial institutions. However, this year, 52 companies saw their share prices slumping. Share price of Himalayan Finance that has been declared problematic slumped the most.
Top 20 earners
United Finance 291
Shree Investment Finance 158
Nepal Bangladesh Bank 148
Citizen Investment Trust 100
Siddhartha Insurance 92
Machhapuchchhre Bank 90
Nepal Life Insurance Co 82
Nepal Credit And Com Bank 77
Oriental Hotel 75
Maha Laxmi Finance 73
Nirdhan Utthan Bank 71
Sagarmatha Insurance 70
Chhimek Laghubitta Bikas Bank 63
Sunrise Bank 59
Unilever Nepal 56
Everest Bank 54
Nepal Investment Bank 53
Life Insurance Co Nepal 52
Butwal Power Co 44
Gurans Life Insurance 43
Source: Nepse/ THT
