Uncertainty on CGT calculation hits stock market
Kathmandu, June 10
Due to the fear among investors that the government could implement the new system of calculating the capital gains tax (CGT) in the secondary market, the Nepal Stock Exchange (Nepse) index plunged by 2.02 per cent or 25.43 points to land at 1231.64 points today — the first trading day of the week.
The Inland Revenue Department had issued a circular on June 1 stating that the method in which the capital gains tax is calculated would be revised. Not happy with the new method share investors had scrambled to talk to government officials on June 3. As the meeting with the finance ministry officials ended inconclusively, the share investors announced protests and halted transactions the next day.
Consequently, Nepse witnessed zero trading on June 4. However, the next day the government announced that the new method to calculate CGT would be put on hold till a study committee formed to look into the issue submitted its report in two weeks. It was after this announcement that share trading resumed.
Seeking anonymity, a stockbroker said, “Unless the study committee formed by the government regarding CGT submits its report and comes up with an appropriate solution the market will continue to go down.”
Today, the sensitive index, which measures the performance of class ‘A’ stocks, also went down by two per cent or 5.3 points to 259.16 points. The float index that measures the performance of shares actually traded also shed 2.1 per cent or 1.9 points to rest at 88.57 points for the day.
Similarly, of the 10 sub-indices at Nepse, nine landed in the red zone today. Trading subgroup did not witness any transaction today.
The insurance subgroup witnessed the heaviest loss going down by 3.37 per cent or 217.24 points to land at 6,235.44 points. Similarly, the hotels sub-index also declined by 2.92 per cent or 54.46 points to 1,811.99 points.
Likewise, the microfinance sub-index went down by 2.63 per cent or 43.96 points to rest at 1,626 points. The banking subgroup also descended by 1.81 per cent or 19.28 points to 1,045.5 points. Similarly, the hydropower subgroup shed 1.77 per cent or 27.27 points to land at 1,511.06 points.
Additionally, development banks sub-index shrunk by 1.51 per cent or 22.24 points to rest at 1,446.76 points. Likewise, others subgroup also went down by 1.25 per cent or 9.13 points to 719.37 points.
The manufacturing subgroup dipped by 1.16 per cent or 27.01 points to land at 2,306.74 points. Moreover, the finance sub-index also went down by 0.87 per cent or 5.47 points to close the day at 621.22 points.