COVID-19 fear causes market volatility

Kathmandu, March 14

Concerns of the coronavirus outbreak hitting the country’s economy resulted in the Nepal Stock Exchange (Nepse) plunging by 4.07 per cent or 58.52 points week-on-week to below the threshold of 1,400 points between March 10 and 12.

“Initially, it was believed that the investor sentiment had been affected due to the reappointment of Finance Minister Yubaraj Khatiwada, but in the following days it became obvious that the market fluctuation was caused by the coronavirus outbreak,” explained Radha Pokharel, chairperson of Nepal Pujibazar Laganikarta Sangh.

While investor sentiment had been boosted a few weeks ago when the daily transaction had topped Rs one billion, rapid global spread of the virus weighed on the share market, she said. “However, as the Citizen Investment Trust is about to establish a stock dealer soon, I believe it will bring market stability in the future,” Pokharel added.

The secondary market had remained closed on Sunday due to Women’s Day and on Monday due to Holi festival. As the market was open for only three trading days, the weekly turnover dropped by 66.06 per cent to Rs 5.50 billion, compared to the previous week when it had been open for normal five days.

In the previous week, the market had witnessed transactions worth Rs 16.21 billion. Nevertheless, the average daily turnover also decreased to Rs 1.83 billion in the review week from Rs 3.24 billion in the preceding week.

The trading volume also decreased to 14.05 million stocks changing hands this week from 16.22 million in the previous week.

The benchmark index was at 1,435.70 points when the market opened for trading on Tuesday. The market regulator had been forced to halt trading that day at 1:13 pm after Nepse index plummeted by 86.39 points. While the market rebounded by 73.78 points the next day as investors sought to capitalise on the reduced share prices, it again dipped by 45.91 points on Thursday to close the week at 1,377.18 points.

In the review week, all the subindices landed in the red zone.

The hotels sub-index was the biggest loser of the week, slumping by 6.46 per cent or 133.94 points to 1,648.65 points with the share price of Soaltee down by Rs 12 to Rs 167.

Life insurance subgroup fell by 5.83 per cent or 489.25 points to 7,897.33 points as the share value of Nepal Life Insurance Co lost Rs 64 to Rs 1,187.

Banking fell by 4.37 per cent or 55.32 points to 1,211.61 points, weighed down by share price of commercial banks like NIC Asia falling by Rs 25 to Rs 550 and Nepal Investment by Rs 14 to Rs 402.

Similarly, non-life insurance fell by 3.74 per cent or 233.54 points to 6,007.15 points. Share price of Himalayan General Insurance Co went down by five rupees to Rs 400.

Likewise, others subgroup fell by 3.42 per cent or 24.83 points to 700.94 points. Development banks subgroup went down by 3.34 per cent or 63.48 points to 1,839.66 points and manufacturing lost 3.27 per cent or 93.81 points to 2,763.33 points.

The microfinance sub-index also dropped by 3.27 per cent or 75.31 points to 2,229.75 points. Likewise, mutual funds slipped 2.88 per cent or 0.30 point to 10.09 points and hydropower fell by 2.26 per cent or 22.63 points to 980.86 points.

Moreover, the finance sub-index edged down 2.21 per cent or 14.92 points to 687.17 points and trading subgroup dipped by 1.62 per cent or 13.93 points to 842.05 points.

In the review week, Nepal Life Insurance Co was the leader in terms of number of transactions and weekly turnover, recording 2,724 transactions that amounted to Rs 520.76 million.

NIC Asia Bank with Rs 345.09 million, NMB Bank with Rs 284.31 million, Himalayan Distillery with Rs 228.37 million and Nabil Bank with Rs 167.19 million rounded up top five in terms of weekly turnover.

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Source: Nepse

Meanwhile, other companies to record high number of transactions were NIC Asia Bank with 2,088, NMB Bank with 1,998, Global IME Bank with 1,496 and Nabil Bank with 1,246 transactions.

In terms of weekly trading volume, NMB Bank was the forerunner with 645,000 of its shares changing hands. It was followed by NIC Asia Bank with 625,000 shares, Global IME Bank with 522,000 shares, Nepal Bank with 454,000 shares and Nepal Life Insurance Co with 433,000 shares.