Nepse plunges after budget statementShare investors were apparently not impressed by the budget statement as stocks plunged to a two-month low on Tuesday, a day after the government’s annual financial plan was published.
Share investors were apparently not impressed by the budget statement as stocks plunged to a two-month low on Tuesday, a day after the government’s annual financial plan was published.
The Nepal Stock Exchange (Nepse) shed 21.15 points to close at 1,594.43 points. With most trading groups ending up in the red zone, the secondary market slipped below 1,600 points, the lowest in the last two months.
The Nepse opened at 1,615.58 points but fell headlong after the government unveiled a Rs1,278 billion budget for fiscal 2017-18 on Monday.
The budget statement has mentioned achieving sustainability in the capital market through policy and structural reform. It has also talked about encouraging real sector companies to go public.
Maintaining transparency and implementing fully automated stock trading are other points included in the budget statement. The budget has also talked about receiving membership of international organisations for the regulation of the capital market.
Investors do not seem to have been convinced by the government’s pledge to develop the capital market despite the several programmes included in the budget statement.
“The government’s announcement was just a conventional approach to bring the country’s only capital market under the budget’s purview,” said Anjan Raj Poudel, past president of the Stock Brokers’ Association of Nepal. “As the budget failed to introduce specific programmes, investors were not motivated to increase their investment in the capital market.”
Poudel also blamed the current political situation for the low level of investor confidence. “Lack of certainty about the timely formation of the new government, confusion over holding the second phase of local elections and the reluctance of Tarai-based political parties to participate in the polls have also influenced the secondary market adversely,” said Poudel.
A continuing liquidity shortage in the banking system even after the completion of the first phase of local elections also worried investors, he added.
Trading groups except manufacturing and finance companies observed a downswing on Tuesday. The insurance group shed 120.5 points to become the top loser, followed by others, commercial banks and development banks.
Karnali Bikas Bank stock rose 9.73 percent to close at Rs282 per share. Synergy Power Company and Mithila Laghubitta Bikas Bank were among the top losers among individual companies.
The day’s total turnover stood at more than Rs763.8 million with 1,297,828 shares trading hands.