Turnover dips as IPOs lure investors awayTurnover at the Nepal Stock Exchange (Nepse) on Monday stood at a mere Rs264.5 million as potential investors held back to subscribe shares at the initial public offerings (IPOs) and further public offerings (FPOs) announced by a number of listed companies.
Turnover at the Nepal Stock Exchange (Nepse) on Monday stood at a mere Rs264.5 million as potential investors held back to subscribe shares at the initial public offerings (IPOs) and further public offerings (FPOs) announced by a number of listed companies.
According to stockbrokers, it was probably the lowest single-day trading volume on the secondary market in more than two years. The capital market has been in a bearish mood for the past two months. Along with the plunging Nepse index, the transaction amount has also been witnessing a slump over the period. Last Wednesday, the transaction amount fell below the Rs400 million mark.
Anjan Raj Poudel, managing director of Thrive Brokerage House, said the turnover in recent days was a result mainly of investor reluctance to buy shares. “Many investors are trying to divert their investment to new IPOs and FPOs, leading to a low transaction volume,” Poudel said.
He added that there was weak demand on the secondary market as investors’ money was stuck in the FPOs and IPOs floated by a number of listed companies. “In addition, rights share issues by a number of companies have also helped to bring down the turnover in the secondary market.”
Two weeks ago, the State Bank of India issued FPOs worth Rs65.8 million, which witnessed massive oversubscription with investors applying for shares worth Rs4.8 billion. Similarly, Samata Microfinance Bittiya Sanstha and Synergy Power
Development Limited have recently conducted IPOs. Likewise, Nepal Life Insurance will be selling 3,096,000 shares at its FPO starting Wednesday. It has fixed a premium price of Rs1,425 per share.
In addition, a number of companies have also been offering rights shares to their shareholders, drawing away investment from the secondary market.
Machhapuchchhre Bank has floated 19,322,700 rights shares and Deva Bikas Bank has issued rights shares in the ratio of 2:1 to its shareholders. Similarly, Araniko Development Bank is selling 51,090.41 primary shares and 43,759.93 promoter rights shares by auction to the general public.
Despite a sharp drop in the turnover amount, the Nepse on Monday rose 11.52 points to close at 1,458.97 points. Nepal Life Insurance observed the largest turnover of Rs28.80 million.
Sebon to launch ASBA interface on Jan 14
KATHMANDU: Very soon, people interested in buying shares floated through the initial public offering (IPO) will not have to wait in serpentine queues, as the Securities Board of Nepal (Sebon), the securities market regulator, is launching Applications Supported by Blocked Amount (ASBA) system.
The interface, being launched on January 14, will allow the public to purchase primary shares only through their accounts opened at banks authorised by the Sebon.
According to Sebon Spokesperson Niraj Giri, the Sebon has permitted commercial and national level development banks to use ASBA interface. As of now, 20 banks have been granted licence to introduce the system.
The Sebon will also make transaction of electronic (dematerialised or demat) shares mandatory throughout the country effective January 14. At present, paperless share transactions are being conducted only in the Kathmandu Valley.
Sebon’s latest decision means remote work stations established outside of the Valley for stock transaction should introduce paperless share transaction from January 14, Giri said.
Currently, nine stockbrokers out of 50 are conducting transactions from major cities such as Biratnagar, Pokhara, Dharan, Birgunj and Narayanghat. (PR)