Responding to continued downward spiral of Nepal Stock Exchange (Nepse) index to hit five-year low, the capital market regulator on Tuesday said there no was no chance of the capital market crashing given the financial health of the listed companies. [break]
The benchmark index shed 5.03 points to close at 339.56 points on Tuesday.
“The situation is not that worse to spark panic selling, as most of the listed companies are reporting better financial results in the second quarter of the current fiscal year compared to the first quarter,” Sebon Chairman Surbir Poudel told media persons.
According to Niraj Giri, spokesperson of Sebon, most of the companies have Price-Earning (P/E) ratio ranging between 15 and 20, which is regarded the best as per the international standard.
Most of the companies have reported positive changes in profit during the second quarter.
Amid continued downfall of Nepse index for the few months, Poudel assured investors that the stock market meltdown in not on the cards given the sound financial health of the listed companies.
“Increasing bank interest rates on both lending and deposits and protracted political uncertainty has plagued the stock market, leading to market speculation,” Poudel said, adding, “It seems that investors psychology is influencing the market.”
“It is the time to buy the share rather than going for panic selling.”
Poudel also said deepening liquidity shortage is the other factor behind ongoing slowdown in the stock market. He expected the market to revive in the coming days given the better financial position of listed companies and the modernization of share trading with the introduction of Central Depository System (CDS) and implementation of five-year plan for capital market development.
“The issuance of Mutual Fund Regulations is also expected to rejuvenate the stock market,” he added.
Four new brokers by next week
Securities Board of Nepal (Sebon) said on Tuesday that it was issuing operating license to four new stock brokers within seven days.
According to the Regulation Department of Sebon, Dakshinkali Investment and Securities, Kalika Securities, Kohinoor Investment and Securities and Swarnalaxmi Securities will get operating licenses in the first phase.
Sebon has already issued letter of intent to the four companies after completing inspection of their infrastructures. It has also instructed a total of 15 companies to develop infrastructure required to start stock broker service.
The government is adding 27 broker companies in the secondary market, taking into consideration rising transaction volume and number of listed companies. This will raise the number of broker companies to 50.
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