- Only 20 billion rupees worth of shares are bought and sold in the hydropower sub-group, the transactions of banks and financial institutions and insurance companies are decreasing.

- NEPSE has 130 banks and financial institutions and insurance, 91 hydropower, 22 manufacturing and processing, 7 hotels, 7 investment, 4 trading and 7 other subgroup companies.

Last week, shares worth 40.985 billion rupees were traded on the stock market. Banks, financial institutions, and insurance companies contributed only about 23 percent to the total weekly turnover. This analysis is based on the share transactions of companies within the subgroups of commercial banks, development banks, finance companies, microfinance institutions, life insurance, and non-life insurance companies, recorded from Sunday to Thursday.

The hydropower subgroup accounted for nearly 49 percent of the total turnover during the same period. Approximately 20 billion rupees worth of hydropower shares were traded. In recent weeks, trading activity within the hydropower sector has been on the rise, while turnover for banks, financial institutions, and insurance companies has declined. This trend indicates that hydropower companies are increasingly dominating the stock market. However, the reduced turnover for banks and insurance companies is not due to poor financial performance but rather due to other structural factors.

One major factor is the decline in the number of banks, financial institutions, and insurance companies listed on the stock exchange, largely due to ongoing mergers and acquisitions. With fewer companies available for trading, their share of total turnover has naturally decreased.

In contrast, the number of hydropower companies has increased significantly. Many of the newly listed companies in recent years belong to the hydropower sector. As a result, the hydropower subgroup’s share of total turnover has risen and is expected to continue growing. Currently, more than four dozen hydropower companies are in the process of issuing IPOs. Once these companies are listed on the secondary market, the number of hydropower companies could reach around 150. Consequently, the market share of banks, financial institutions, and insurance companies is likely to decrease further, while hydropower companies’ influence will continue to expand in the coming years.

The investment subgroup contributed 14.85 percent to last week’s total turnover, with shares worth 6.9 billion rupees traded. As of the end of March, a total of 268 companies were listed on the Nepal Stock Exchange (NEPSE). Among them, 130 are banks, financial institutions, and insurance companies; 91 are hydropower companies; 22 are manufacturing and processing industries; 7 are hotels; 7 are investment companies; 4 are trading companies; and 7 fall under the ‘other’ category. In comparison, the number of listed companies was 271 at the 2nd week of April, 2024.

In terms of market capitalization, banks, financial institutions, and insurance companies hold a dominant 53.2 percent share. Hydropower companies account for 15.7 percent, investment companies 7.6 percent, manufacturing and processing industries 5.4 percent, trading companies 5.1 percent, hotels 2.6 percent, and other companies 10.4 percent.

The stock market operated for five days last week. NEPSE declined on four of those days but closed with a modest gain on Thursday. NEPSE, which ended at 2,722.73 points the previous Thursday, fell to 2,658.02 points by the end of last week.

Source: Kantipur