Nepal Stock Exchange (NEPSE) – A Short Introduction

Nepal Stock Exchange (NEPSE) is the country’s sole stock exchange. It is located in Kathmandu, Nepal, at Singha Durbar Plaza.

In 2033 BS, the government established a security purchasing and trading center in Nepal. In 2050 BS, the same location became the Nepal Stock Exchange Limited (NEPSE).

On January 13, 1994, the Nepal Stock Exchange (NEPSE) inaugurated its trading floor (29 Poush, 2050). It is Nepal’s sole stock exchange. As of May 13, 2020, the total market capitalisation of the companies listed on NEPSE is around Rs 1.54 trillion.

Objectives of Nepal Stock Exchange (NEPSE)

The primary function of the stock exchange is to facilitate the trading of listed securities. NEPSE has been trying to register publicly issued securities in the secondary market so that they can be traded easily. This is referred to as listing.

The Nepal Stock Exchange Limited (NEPSE) is a specialized government-owned entity governed by the Companies Act. It does business in compliance with the Securities Act. Its principal goal is to assist to the country’s economic development through capital formation and mobilization, as well as to stimulate investor interest by establishing a secondary market for the trading of securities issued by the Government of Nepal and organizations.

Nepse has been a prominent regulatory organization in terms of market operations, listed firms, and securities dealers, in keeping with its goal of trading shares, bonds, mutual fund units, and other securities through member brokers.

At the moment, the Nepal Stock Exchange offers general investors the ability to purchase and sell securities through 50 member brokers and 41 Remote Work Stations (RWS) in key cities both inside and outside the Kathmandu Valley.

The brokerage firm and its branches are spread across 21 different cities in Nepal.

Nepal’s capital market is in its early phases of development due to the size of the market, kind of company, financial instruments to be exchanged, laws and regulations, technology utilized for business, other physical infrastructure, manpower, and so on.

Similarly, Nepse is a founder member and current Executive Board Member of the South Asian Federation of Exchanges. It is also an Affiliate Member of the World Federation of Exchanges, with plans to become a full member soon.

Share Ownership In Nepal Stock Exchange

The Government of Nepal promotes the Nepal Stock Exchange (NEPSE). The Nepalese government owns 58.65 percent of NEPSE.

The significant shareholders of the Nepal Stock Exchange (NEPSE) are shown in the table below. It also includes a proportion of ownership.

Board of Directors of Nepal Stock Exchange

According to the Securities Act of 2006, the Board of Directors (BOD) of the Nepal Stock Exchange (NEPSE) is made up of members from various sectors. The BOD now consists of two members from the Nepal Government, one from Nepal Rastra Bank, and one from Rastriya Banijya Bank. Furthermore, the BOD will propose one member as a capital market expert. NEPSE’s General Manager will serve as a director on the BOD.

Nepse Index

NEPSE index is the market value weighted index. This index shows the aggregate growth in capitalization of companies listed in Nepal Stock Exchange.

Nepse Index reached its all-time high of 1881.45 on July 27, 2016.

Sensitive Index

Index calculated from the market capitalization of companies classified under group “A” is called sensitive index.

Sub Indices In Nepse

The sub-indices in Nepse include:

1. Banking
2. Development bank
3. Finance
4. Microfinace
5. Manufacturing And Processing
6. Hydro Power
7. Non Life Insurance
8. Life Insurance
9. Hotels
10. Mutual Fund
11. Other

Works Done By Nepal Stock Exchange (NEPSE)

Provides a market platform for buying and selling of secondary shares, debentures and bonds.

Develops and expands the secondary market in the capital market by supporting the policy and guidelines of the Government of Nepal.

Regulates listed companies, brokers and investors.

Spreads public awareness about capital markets.

Regulates and monitors the listed public limited companies.

Take membership with national and international capital market organizations.

List new companies to trade on the stock exchange, as well as OTC companies that are not listed or disbanded.

Development and expansion of the capital market by increase the number of institutions involved in the market.

 Runs a clean, transparent, credible, fair market and works in the interest of investors.