Face value of listed shares up four fold in five years

Face value of listed shares in Nepal Stock Exchange (Nepse) has jumped by four times in five years, thanks to the rise in the number of Initial Public Offerings (IPOs) and issues of rights and bonus shares by banks and financial institutions to raise their capital base. According to Nepse - the sole secondary market in the country, total face value -- paid up value of shares -- shot up to Rs 61.14 billion during the fiscal year 2008/09 from Rs 12.01 billion recorded in 2003/04. Similarly, the total number of listed shares in Nepse rose to 637.8 million units in fiscal year 2008/09 from Rs 243.5 million units recorded in 2006/07. Securities Board of Nepal (SEBON) - the capital market regulator -- had given permission to issue ordinary shares and rights shares worth Rs 8.56 billion to different companies till mid-March 2010. A total of 18 companies have been allowed to issue ordinary shares worth Rs 2.4 billion whereas 20 companies are permitted to issue rights shares worth Rs 6.52 billion. As of mid-March, 16 more companies have sought permission from SEBON to issue public shares worth Rs 6.31 billion and 12 companies have approached the capital market regulator for issuing rights shares worth Rs 409.4 million. Share analysts have suggested authorities concerned to raise the number of investors by expanding internet based trading system to deal with the increasing flow of shares in the secondary market. "We have to adopt modern technology in share trading so that more and more investors can be encouraged in share investment," said Nanda Kishore Mundada, president of Nepal Stock Brokers´ Association. He also suggested increasing foreign investment in the secondary market by attracting non-resident Nepalis and overseas investors. Investors have suggested authorities concerned to introduce a provision for easy and hassle free loan so as to encourage more investment in the secondary market, which has been flooded with new rights and bonus issues in recent years. "Rising volume of shares won´t be a problem in the market if there is guarantee of bank loans to invest in shares," said Nirmal Pradhan, a stock investor. Last year, 63 companies had received permission to issue ordinary and rights shares worth Rs 14.83 billion. As per the directives of Nepal Rastra Bank, banks and financial institutions must raise their paid-up capital base to Rs 2 billion by 2013/14.

Source: myrepublica.com