Though the capital market experts would like to see more real sector companies trading on the stock market, the experience indicates that very few shares of the listed manufacturing companies get traded on the exchange. Since the beginning of 2011, the number of traded shares of manufacturing subgroup comprised a mere 0.01 per cent of total shares listed under manufacturing subgroup. There are more than 34-million unit shares of 18 manufacturing companies listed in Nepal Stock Exchange (Nepse). However, the market saw 5,500-unit shares of only two companies being traded in the last 85 days. Also, the total volume of transaction in the period added up to Rs 5.5 million while the paid-up capital of manufacturing subgroup is more than Rs 3.4 billion. Bottlers Nepal-Terai Ltd (BNT) and Unilever Nepal Ltd (UNL) are the only two companies whose shares got traded in the secondary market since the beginning of 2011. "The manufacturing companies' shares do not get traded in the stock market because of their poor performance," said Shurbir Paudel, chairman of Securities Board of Nepal. "Those few that are doing quite well are also not distributing dividends to the share holders and their financial disclosure is also not frequent enough, making the investors to avoid purchasing their shares," he added. "Also, public need to trust these companies to purchase the shares, investors might find trusting unknown companies difficult but established companies with good track record need not fear that their public offerings will get under-subscribed," he pointed out. The real sector companies need to feel the need of offering the shares to the public. The companies pre fer raising capital by borrow ing from financial institu tions instead of offering shares to public. The government has even announced in the budget for the current fiscal year that the companies that get listed in the stock exchange will be entitled to 10 per cent tax discount as an incentive. The stakeholders have been expressing the need for more manufacturing and such companies in the capital market as overwhelming presence of financial intermediaries in the secondary market has not been beneficial to the mar ket. "It is never favourable for the market to be dependent on one particular sector as the failure of that sector will bring down the whole sector," he commented. "Most of the listed companies under manufacturing subgroup are not doing well," said Rabindra Bhattarai, a stock analyst. "Those with a good performance have also not listed large volume of shares in the stock market. Since they reap good return, investors holding the shares do not want to sell the those stocks," he added. Private sector players have also insisted that they might float shares to the public if there are enough incentives. They said due to overall adverse economic environment plaguing the nation, investors may not want to invest in a manufacturing company . Source:thehimalayantimes
Since the beginning of 2011, the number of traded shares of manufacturing subgroup comprised a mere 0.01 per cent of total shares listed under manufacturing subgroup. There are more than 34-million unit shares of 18 manufacturing companies listed in Nepal Stock Exchange (Nepse).
However, the market saw 5,500-unit shares of only two companies being traded in the last 85 days. Also, the total volume of transaction in the period added up to Rs 5.5 million while the paid-up capital of manufacturing subgroup is more than Rs 3.4 billion.
Bottlers Nepal-Terai Ltd (BNT) and Unilever Nepal Ltd (UNL) are the only two companies whose shares got traded in the secondary market since the beginning of 2011.
"The manufacturing companies' shares do not get traded in the stock market because of their poor performance," said Shurbir Paudel, chairman of Securities Board of Nepal.
"Those few that are doing quite well are also not distributing dividends to the share holders and their financial disclosure is also not frequent enough, making the investors to avoid purchasing their shares," he added.
"Also, public need to trust these companies to purchase the shares, investors might find trusting unknown companies difficult but established companies with good track record need not fear that their public offerings will get under-subscribed," he pointed out.
The real sector companies need to feel the need of offering the shares to the public. The companies pre fer raising capital by borrow ing from financial institu tions instead of offering shares to public.
The government has even announced in the budget for the current fiscal year that the companies that get listed in the stock exchange will be entitled to 10 per cent tax discount as an incentive.
The stakeholders have been expressing the need for more manufacturing and such companies in the capital market as overwhelming presence of financial intermediaries in the secondary market has not been beneficial to the mar ket.
"It is never favourable for the market to be dependent on one particular sector as the failure of that sector will bring down the whole sector," he commented.
"Most of the listed companies under manufacturing subgroup are not doing well," said Rabindra Bhattarai, a stock analyst.
"Those with a good performance have also not listed large volume of shares in the stock market. Since they reap good return, investors holding the shares do not want to sell the those stocks," he added.
Private sector players have also insisted that they might float shares to the public if there are enough incentives. They said due to overall adverse economic environment plaguing the nation, investors may not want to invest in a manufacturing company .
Source:thehimalayantimes