Boycott plunges Nepse by 50.29pts

Boycott plunges Nepse by 50.29pts

Boycott plunges Nepse by 50.29pts

Jun 10, 2018-Nepal Stock Exchange (Nepse) for the first time witnessed a boycott by investors, forcing the market to nosedive by 50.59 points to close at 1,257.07 points last week.

After the Inland Revenue Department (IRD) forwarded letters to Nepse and the Securities Board of Nepal to revise the threshold of the capital gains tax on bonus shares and right shares, the market that opened at 1,307.66 points on Sunday declined 33.71 points to close at 1,273.95 points.
The secondary market on Monday lost 5.11 points and closed at 1,268.84 points, in the aftermath of the investors boycott of stock trading for a half an hour — a move to protest the IRD’s move.

The investors completely halted stocks trading on Tuesday after the government showed no signs of addressing their demands to revoke the contentious clause that hiked capital gains tax.

On Wednesday, the market responded positively to the Finance Ministry’s take to annul its previous decision and to form a task force to study the implication of capital gains tax on bonus shares and right shares. As the trading of stocks resumed, Nepse added 13.91 points on the day.

However, the market failed to maintain the momentum and instead plunged 25.68 points on Thursday. Consequently, the market closed with a downfall of 3.86 percent in overall transactions over the week.

Stockbrokers attributed the fall in Nepse to the investors’ losing their confidence in the secondary market despite the government’s move to form a panel to study the capital gains tax issue. “At a time where investors were dismayed by the hike in rate of capital gains tax to 7.5 percent from five percent, the government’s new rule has only made them lose confidence in Nepse,” said a stockbroker under condition of anonymity.

The sensitive index that measures the performance of Group ‘A’ companies also went down 10.82 points to close at 264.46 points with majority of the trading groups observing dramatic losses.

Along with a fall in the market index, the average value of shares listed on the stock market also downsized by Rs59.19 billion, as the market capitalisation reached to Rs1,483.33 billion from Rs1,542.52 billion over the week.

Except for the sub-index of manufacturing, the remaining nine trading groups were in the red during the review period. Of the losers, index of insurance companies plunged 386.35 points, the largest fall, to close at 6,452.68 points. Index of hotels fell 99.42 points, microfinance 86.76 points, hydropower 71.31 points and that of development bank fell by 44.84 points.

Similarly, commercial bank witnessed a fall of 41.45 points, finance companies a fall of 19.65 points, ‘others’ a fall of 17.41 points and trading underwent a fall of 2.87 points.

Source:-ekantipur

 

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