Main events of Nepali share market in 2015

Nepalese share market went through lot of ups and down this year. NEPSE index blows with 20% growth within a year. In the beginning of the year i.e. January 2015, NEPSE index was at 902 points which went as high as 1221 points and rested at 1151 points at the end of the year.  Transactions took place for total of 215 days. Let's review the main highlights of Nepalese capital market in the year 2015:

1.       After math of April 25^th earthquake: Nepse index deducted by 100 points after the earthquake of Afril 25 and may 12. First time in history, Nepse was closed for continue 28 days.  When it open in Jestha 10, nepse index dropped by 28.37 points to 938.19 points. NEPSE was expected to crash with the opening of themarket after earthquake but in the transaction of 4 days, nepse index dropped by 101 points  to rest in 938 points.

2.       Impact of monetary policy:  in the mid 2015, when newly appointed governor dr. Chiranjibi Nepal brought monetary policy with the directive of compulsory increase of paid up capital by 8 billions, NEPSE index rises by 40 points to 1003. As per the NRB directive, 'a' listed commercial banks required to increase their paid up capital to  8 billion, development banks operating in national level requires to increase their paid up capital to  2 billion 500 million, development banks operating in 4 to 10 districts require to increase their paid up capital to  1 billion 200 million and development banks operating in 1to 3 districts require to increase  their paid up capital to 500 million. Similarly, national level finance companies as well as companies operating in 4 to 10 districts needs to increase their paid up capital to 800 million and finance companies operating in 1 to 3 districts need to increase their paid up capital to 500 million. This compulsory made regulations increased expectations of investors to get bonus share and right shares as the banks and financial institutions needs to increase their paid  up capital to meet the deadline which also helped NEPSE index to jump to 1221 points which is the  highest recorded index points in NEPSE history.

3.       Impact of new amended constitution: Though a fragile boost is seen in NEPSE index immediately after the amendment of constitution, it could not be lasted for long time as madesh based political parties started their movement in Taria and also unofficial blockade imposed by India.

4.       Appointment of Rewat Bahadur Karki in SEBON: Appointment of Rewat Bahadur Karki in SEBON also got much publicity in the market. Karki is well-knower of the market who shows short term, mid term and long term plan for the improvement of the capital market. Capital market is expected to get some well deserved push in his period. Besides the following steps taken by SEBON has also influence the capital market:  arrangement to make  SEBON a techno friendly market, practice to make investors and brokers more efficient and , increase in manpower, improvement in internal administration, minimize expenses to issue IPO, declaration to  make citizen investment fund a institutional investors, management of broker commission and advancement in investment of stock market.

5.       Impact of Madhesh movement and blockade:  Against the expectations of common investors capital market  got dumped after amendment of constitution due to the unrest in Tarai and unofficial blockade of INDIA. Nepalese economy is having turmoil due to the Madesh unrest and blockade imposed by India. Nepalese economy is estimated to lose more than 15 trillion in this chapter. Though capital market didn't lose much as compare to national economy, it has decreased by some extent.

6.       Dematerialization of share and activeness of CDS: In recent time, capital market is seen more accessible and managed due to the adoption of digital system through CDS and d-mat of paper share certificate of all listed companies.

7.       Beginning of market depth: Concept of market depth has also heated capital market at the end of the year. Nepalese investors got to watch market depth from last Sunday which is long accessible to the foreign investors in their countries.  Market depth mainly shows demand and supply price of stocks to the investors which facility was available to brokers only. Nowonwards, general investors can get the information related with their desired stock during trending time of the market which is hoped to be a milestone for the Nepalese capital market.

8.       Issuance of bonus and right shares and fast-track merger of banks and financial institutions: After the NRB directive to increase paid up capital; issuance of bonus shares and right shares has taken up speed that will significantly increase size of the market. Also, due to price adjustment, price of financial sector shall take a decline in coming days. Due to merger of banks and financial institutions, investors' money may fridge for some time too.

9.       Attraction in Microfinance and insurance in the end of the year:  As the investor directed their investment towards microfinance and insurance sector at the end of the year, banking sector saw some rest in their share transaction.

10.   Media involvement in the development of stock market: 2015 has also been a good year for the stock market as media got involved with the market. While there was a time, when investors may not get any information regarding sharemarket through any means, 2015 saw a drastic phase when a small change in capital market is covered by different financial newspaper as well as online financial news portal.

One of the most important phases in media might be when Capital market and research Pvt. Ltd operated a program named Bazaar guru in Himalayan television to give every details of capital market to its viewers in the market trending time so as to help investors make their investment choice with updated data.

11.   Availability of fake stock:  buy and sale of fake stock for the market also seen during the year. This incident paves ways for Nepal stock exchange in association with broker association and Nepalese police to investigate and forced the investors to transact with all the necessary documents,  to fill up know-ur-client, sell and buy order and application form in perfect manner and to pay with A/C payee cheque while transacting securities.

12.   Cross holding system and  new regulation for clearing of BT share: Decision taken by former governor Dr. Yubraj Khatiwada kept NEPSE under pressure throughout the year.   Circulars issued by NRB that restricted commercial banks to  hold the shares of another commercial banks and mandatory provision to keep 5% compulsory provision also shook the capital market. As a result Nepalese banking sector covering more than 75% of market couldnot keep NEPSE stable. In addition to that, directive to clear BT shares also influence the market.

13.   Restrictions on adding Promoters share in total paid up capital and restriction on  distribution of dividend: besides these, NRB also restricted to add promoters share in total paid up capital and distribution of dividend is also restricted which also affect the capital market.

14.   Issuance of IPO and FPO and entrance of new investors in the market: During the year, flow of IPO and FOPs were significantly high which is well accepted by the investors.  Even FPO issued in premium saw extreme attraction from investors.

Conclusion: Overall, year 2015 remained quite a volatile and important for Nepalese capital market. NEPSE saw 20% growth during this year. We can say that April 25 earthquake, new monetary policy, unofficial blockade by India, market depth and d-mat of shares have affected the capital market somehow.