. The Nepal Stock Exchange (Nepse) has announced that the ‘Nepse-30’ has disappeared within the Nepal Stock Exchange (NEPSE) for a long time. The work of ‘NEPSE 30’ to be published by NEPSE has reached the final stage. This work has also come to a halt with the exit of Shobha Kanta Poudel from the post of chairman of NEPSE.
Final preparations were made to publish ‘NEPSE 30’ during Poudel’s tenure. This work has been stopped because of Poudel. Chairman Poudel had stopped the implementation of NEPSE 30 before the last meeting of the Board of Directors approved it.
According to sources, after all the work was finally approved, he stopped bringing the file to the final meeting, questioning what would be the benefit to him or NEPSE. According to the source, he stopped the file to go to the market with the intention of increasing the price of 30 companies while implementing the ‘Nepse 30’ and that he should be criticized for it.
The reason for his fear was that he was preparing to be promoted to the post of secretary and when the then chairman of the Securities Board of Nepal Bhishma Raj Dhungana announced the names of 52 companies, Poudel was a director of the board. At that time, he had stopped the file saying that he was criticized and should be criticized for bringing ‘NEPSE 30’. One of the then directors said that the contract to develop the market is only for Nepse. The next chairman and CEO have not shown any interest in this matter.
It is said that there is a discussion on managing the index in a new way rather than bringing NEPSE 30 in NEPSE. It has not been revealed what the new method is. The then NEPSE Board of Directors had approved the formation of an ‘Index Management Committee’ for the publication of the proposed ‘NEPSE-30’ index.
It was decided to form a committee comprising NEPSE CEO, departmental head and research section chief. It was not possible to publish NEPSE-30 without the selection of the committee. The committee was responsible for recommending ‘NEPSE-30’ by incorporating necessary legal, practical and technical aspects. Preparations were made to publish ‘NEPSE 30’ based on the recommendation of the committee. Accepting the suggestion, Poudel stopped the publication of NEPSE 30 at a time when the board meeting would approve it.
NEPSE had also informed the Securities Board of Nepal (SEBON) about the ‘NEPSE 30’. The Guidelines on Index Development, Operation and Management-2079 were approved for the publication of NEPSE 30. NEPSE has also prepared a list of companies that are included in the ‘NEPSE 30’. There were 8 commercial banks, 4 hydropower companies, 5 insurance companies, 2 production and processing companies, 8 microfinance companies, and 8 other companies.
According to NEPSE, the index calculation method will be made realistic and the fluctuations in the market will be made real after the publication of ‘Nepse 30’. With the objective of developing, operating and managing the indices in order to make the secondary market transactions more effective, NEPSE 30 Index will be launched as an index based on market capitalization by including immediately tradable shares.
The index reflects market transactions and fluctuations and is expected to help in the operation of fixed-term trading instruments of derivative nature, portfolio management, exchange traded fund operations, etc. The book price per share of a company included in the NEPSE 30 index should be higher than the paid-up price per share. In the last five fiscal years, the company has been making a profit for at least three years, including the last fiscal year, and the earnings per share in the previous fiscal year should be at least 10 percent of the paid-up value and should be higher than the annual inflation rate of the same year.
The company must have at least 25 percent of the shares issued to the general public or more than 1 percent of the total free-float market capitalization. To be listed in NEPSE 30, the number of shareholders should be at least 20,000, average daily transactions of Rs 2.5 million or more in the last six months, average daily trading of 5,000 units or more shares, average daily transactions of 40 or more times and at least 75% of the available trading days in the last six months.
NEPSE has also prepared the calculation method of ‘NEPSE 30’. The total weightage will be calculated on the basis of freefloat market capitalization, earnings per share of the previous year, transaction amount, number of transactions and number of shares transacted. If the number of corporate entities exceeds 30, then the companies with less weight in the total weight will be removed and 30 companies will be retained.
For calculating this index, the base market capitalization will be taken as the freefloat market capitalization of January 15, 2022. The index will be adjusted every year by rebalancing the last Friday of August and the last Friday of Falgun.
Poudel was promoted to the post of secretary on May 14. After being promoted to the post of secretary, he left NEPSE. After this, the government appointed Hemanta Basyal as the chairman of the party in August. Chudamani Chapagain was the CEO of NEPSE when Poudel was the chairman of NEPSE. They have also not done any work for NEPSE 30 publications.
Nepse Spokesperson Murhari Parajuli said that no work has been done on the issue of NEPSE 30 at present. He said that it is yet to be discussed afresh.
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