Nepal Stock Exchange slid to a three-year low of 1,109.72 points on Sunday in an indication that investors’ interest in the share market is progressively fading.

The secondary market was not buoyed by Prime Minister KP Sharma Oli’s orders to the Finance Ministry on Saturday to check and ultimately reduce the high lending rates currently offered by banks.

On December 8, 2015, Nepal Stock Exchange (NEPSE) closed at 1,107.23 points. The secondary market lost 304 points last year alone, with a bearish trend ruling the market.

The market is in a free fall as the government has failed to come up with effective policies to boost investors’ confidence along with the banks charging high interest rates, according to investors. The investors also attributed the free fall to the regulator’s failure in resolving problems that appeared in the automated online system that the bourse launched on November 6 last year.

Chhote Lal Rauniyar, vice president of Nepal Investors’ Forum, said the government has failed to implement the policies that were introduced to streamline the capital market. “As it was not effectively implemented, investors were not confident in putting money into the secondary market.”

According to him, low demand compared to the increasing supply of stocks has also led to the bearish trend at the secondary market. “Despite the government announcement to promote a business friendly environment, NEPSE is not able to bring foreign investors, banks are still not able to enter the brokering business and implement the margin lending effectively,” Rauniyar said.

According to him, investors do not have easy access to the online trading system. “There is still difficulty in receiving the password from brokers while individual investors still have to depend largely on the brokers to post sales and purchase orders,” Rauniyar added.

The low confidence of investors has also been highlighted with falling demand even for initial public offerings. According to NEPSE, many listed companies, particularly the hydropower companies, have been unable to sell their primary shares. The listed companies used to witness over subscription while floating the primary shares most of the time in the past.

But recently, to the surprise of many, the initial public offerings floated by Radhi Bidyut Company, Joshi Hydropower Company, Ghalemdi Hydropower Company, Universal Power, Shuvam Power Company, Panchthar Power Company, Union Hydropower, Mountain Hydro Nepal and Shivam Cement were under subscribed.

Paristha Nath Poudyal, executive director of Sebon, said the regulator has started investigation on the problems that investors are facing with the newly launched online trading software. “After we received a series of complaints, we have initiated enquiring investors, brokering companies and Nepse officials over the issue,” Poudyal said.    

Sebon relaxes rules to attract investors

KATHMANDU: The Securities Board of Nepal (SEBON), in a bid to facilitate the government announced ‘hydropower programme for the general people,’ has allowed people to invest only 10 percent of the pledged amount at the initial stage to purchase the shares of government-owned hydro companies. Earlier, investors needed to invest the entire amount at once to purchase the shares.

Paristha Nath Poudyal, executive director of SEBON, said the investors are able to purchase shares at 10 percent value of its listed value but only for stocks issued by hydropower companies in which the government holds at least 51 percent stake. “Once the project completes half of its construction work, the investors will then have to clear the remaining dues,” Poudyal said.

According to SEBON, it has amended the Securities Registration and Issue Regulation 2016 to attract more investment from the general people in hydropower projects. There are 19 state owned hydropower companies with the government having more than 51 percent stake. Poudyal said these companies are in the process of floating shares for general people.