KATHMANDU, Sept 28: Share transaction amount plunged by 30.8 percent this week at Nepal Stock Exchange (Nepse), as upheavals in the political sector and end of the dividend declaration season dampened the mood of investors.
Nepse´s weekly report shows, total transactions amounted to Rs 435.66 million over the week, as against Rs 629.59 million in the previous week, revealing the bourse was not as liquid as that of a week ago.
“The transaction amount fell as calls by opposition parties to launch street protests and talks about change in the government sent jitters among investors,” Anjan Poudel, a stock broker, said. “Many investors were also not interested on the stock market during the week as most of the companies have already declared dividends, while those wanting to purchase shares are waiting for further reduction in prices.”
Share market heats up when listed companies start announcing dividends, including cash and bonus shares. During this time of the year, the buying spree begins. But this interest soon evaporates after dividends are declared.
This year, many investors were not happy with dividends declared by commercial banks, which make up over 50 percent of the total market capitalization. Many banks failed to distribute cash dividend this year as they have to meet the benchmark of 11 percent capital adequacy ratio set by the central bank to make such payments.
“At the same time, the bonus shares distributed by these institutions also failed to meet the expectation of investors,” Poudel said.
This triggered selling pressure, which caused the banking sub-index to shed 10.59 points over the week from Sunday´s opening of 366.42 points.
Nepse report shows shares prices of four major commercial banks fell over the week, with shares of Nabil Bank taking the biggest plunge of 3.4 percent. The bank´s shares which opened at Rs 1,470 on Sunday morning closed at Rs 1,419 on Thursday. Stocks of other leading banks, like Standard Chartered, Everest and Himalayan, also fell in the range of 2.8 percent and 3.3 percent over the week.
The poor performance of commercial banks, coupled with fall in share prices of hotels and development banks, caused the Nepse index to dip by 1.27 percent, or 4.74 points.
The benchmark index, which opened at 420.44 points on Sunday morning, fell down to 415.17 points by the end of the same day and fluctuated in the range of 413 points to 414 points for the rest of the week, before closing at 415.70 points on Thursday -- the last trading day of the week. This erased Rs 4.48 billion in market capitalization from the stock market over the week.
But not everyone was a loser.
Stock prices of leading insurance companies, for instance, rebounded over the week. Of these companies, Nepal Life Insurance Company was the biggest gainer with its shares advancing 6.7 percent to end the week at Rs 1,218. Share value of other insurers, like Beema Sansthan and Life Insurance Company, also rose this week.