NEPSE and Capital Market

Category

Capital Market & NEPSE

Details

Nepal's Capital Market

The capital market in Nepal facilitates the raising of long-term capital for businesses and provides investment opportunities for individuals and institutions. The Nepal Stock Exchange (NEPSE) is its central pillar.

Nepal Stock Exchange (NEPSE)

Establishment: NEPSE is the only stock exchange in Nepal, established in 1993.
Trading System: Electronic trading was introduced in 2007, significantly modernizing transaction processes.
Regulation: NEPSE and the broader capital market are regulated by the Securities Board of Nepal (SEBON), the apex regulatory body.

Types of Securities Traded

Ordinary Shares (Common Stock): Represents ownership in a company, carrying voting rights and potential for dividends and capital appreciation. Dividends are not guaranteed.
Preference Shares: Offer a fixed dividend payment and have priority over ordinary shares in dividend distribution and asset liquidation.
Debentures/Bonds: Debt instruments issued by companies or the government to raise capital, offering fixed interest payments to investors.
Mutual Funds: Investment vehicles that pool money from multiple investors to invest in a diversified portfolio of securities, managed by professional fund managers.

Key Institutions in the Capital Market

SEBON (Securities Board of Nepal): The primary regulator responsible for developing, monitoring, and supervising the capital market.
CDSC (CDS and Clearing Limited): Manages the clearing and settlement of securities transactions and provides depository services.
MeroShare: An online platform facilitating investors to apply for Initial Public Offerings (IPOs) and manage their dematerialized (Demat) accounts.

IPO Process in Nepal

Prospectus Filing: A company intending to issue shares to the public must file a prospectus with SEBON for approval.
Issue to Public: Once approved, shares are offered to the public, often becoming heavily oversubscribed due to high investor demand.
Allotment: In cases of oversubscription, shares are typically allotted to applicants through a lottery system to ensure fairness.

NEPSE Index

The NEPSE Index is the benchmark index that tracks the performance of listed companies on the Nepal Stock Exchange.
Historic High: The index reached its historic peak of 3,198.60 points in August 2021, reflecting a period of significant market growth.