More FIs barred to trade shares

Kathmandu, May 9:

Nepse has barred share trading of three more financial institutions (FIs). The FIs should get Letter of Intent (LoI) from the Nepal Rastra Bank (NRB), the regulatory authority, to merge.

“Otherwise the share trading will be automatically barred. National Finance, Narayani Finance and Paschimanchal Finance have been barred from trading their shares from Sunday until further notice,” states a press release issued here by the Nepal Stock Exchange (Nepse). These institutions have announced merger to upgrade to the B-class development bank.

“However, they don’t have yet got LoI from the central bank yet.

Two of them — National Finance and Narayan Finance — had earlier also entered into an agreement to merge with Mahalaxmi Finance and upgrade to B-class development bank.

“But they broke the agreement and Mahalaxmi Finance entered into yet another agreement with other four financial institutions to upgrade to A-class commercial bank,” Rewat Bahadur Karki, general manager of the Nespe, said, adding that Nepse is serious in such merger cases as they have already failed to act on earlier agreement. “The agreement might fuel the price of the shares of these companies ‘unnaturally’.”

“The financial institutions going for merger should get the Letter of Intent from the NRB first,” he said, adding that otherwise the share trading of such companies will automatically be barred from now onwards,” he added.

Nepse has barred share trading of five financial institutions; Mahalaxami Finance Ltd, Birgunj Finance Ltd, Siddhartha Finance Ltd, Butwal Finance Ltd and Himchuli Development Bank until further notice — from yesterday.

The four finance companies and a development bank have jointly announced merger to become a commercial bank with a paid up capital of Rs 2 billion. The news of merger and upgradation has fuelled the share price of these financial companies.

Mahalaxmi Finance Ltd, Birgunj Finance Ltd, Siddhartha Finance Ltd, Butwal Finance Ltd and Himchuli Development Bank have signed an accord last week to merge and upgrade to A-class commercial bank.

Market capitalisation up by 77.3pc

KATHMANDU: The year on year (y-o-y) Nepse index has increased by 44.7 per cent to 714.76 points in mid-March 2008. This index was 494.06 a year ago, according to macroeconomic situation based on eight months of this fiscal year. “The y-o-y market capitalisation has increased by 77.3 per cent to Rs 230.82 billion in mid-March 2008. Market capitalisation to GDP ratio increased to 29.1 per cent from 18.1 per cent a year ago. Of the total market capitalisation, bank and financial institutions hold the largest share, states the report published

by NRB.

Total paid up capital of the listed companies has also increased by 17.01 per cent amounting to Rs 24.59 billion in mid-March 2008, due to the additional listing of securities. Total number of companies listed at the Nepse stood at 146 in mid-March 2008 compared to 131 a year ago. Among them, bank and financial institutions are 111. Production and processing industries, hotels, business entities, hydropower and companies in other groups are 21, 4, 5, 3 and 2, respectively. “Monthly turnover to market capitalisation ratio stood at 0.81 per cent in mid-March 2008 compared to 0.55 per cent a year ago,” states the report.

The twelve-month rolling standard deviation reflecting an increased volatility in the stock market stood at 172.4 in mid-March 2008 compared to 69.2 a year ago. Securities Board of Nepal (Sebon) granted permission for primary issuance of Rs 4.98 billion in the first eight months of 2007-08. These consist of ordinary shares of Rs 402.4 million to eight companies, right shares of Rs 3.08 billion to seventeen companies and debentures of Rs 1.50 billion to Nepal Electricity Authority (NEA).

The government also issued Treasury Bills of Rs 6 billion, Development Bonds of Rs 2.4 billion and Citizens Saving Certificate of Rs 800 million in the first eight months of this fiscal year,

according to the NRB report. — HNS