CGT dispute a drag on investor sentiment

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Kathmandu, August 17

The government’s dilly-dallying in resolving the capital gains tax (CGT) issue in share transactions continued to weigh on share investors’ sentiment, causing the country’s sole secondary market to record the fourth week-on-week loss between August 11 and 15.

Share investors have claimed that the Securities Board of Nepal (SEBON) has not been playing the role of a facilitator in settling the confusion related to CGT, although it was believed earlier that the matter had been put to rest following an agreement during a meeting among the concerned stakeholders.

In a meeting a few weeks ago, it had been decided that the base rate for calculating CGT during share transactions would be derived from the weighted average of share price from July 16, 2001 to July 16, 2019. It had been said that CDS and Clearing would determine the average price of shares from fiscal 2001-02 to fiscal 2018-19. However, government later announced CGT had to be based on opening price of shares.

“By flip-flopping on its stance on CGT calculation, the government is only creating confusion in the market,” alleged Radha Pokharel, chairperson of Nepal Pujibazar Laganikarta Sangh.

Pokharel further said all the organisations of share investors are gearing up to jointly put pressure on the Ministry of Finance to either revoke the decision of applying CGT or immediately resolve the dispute. “It seems unless we create pressure on the government, our concerns will not be addressed.”

Nepal Stock Exchange (Nepse) index was in downward trend in the review week, falling by 1.17 per cent or 14.52 points. Sensitive index also went down by 1.23 per cent or 3.32 points to 264.69 points and float index dropped by 1.20 per cent or 1.10 points to 89.96 points.

Weekly turnover fell by 18.42 per cent as compared to previous week to Rs 1.79 billion. In previous week, market had witnessed transactions worth Rs 2.19 billion. However, trading volume rose from 7.43 million shares traded last week to 7.53 million stocks changing hands this week. Trading of mutual funds’ shares soared by 42.37 per cent as compared to previous week to Rs 10.45 million. In previous week, mutual funds had turnover of Rs 7.05 million.

The secondary market had opened on Sunday with benchmark index at 1,238.56 points. It had fallen by 4.84 points by the end of the day. Although the market inched up by 0.13 point on Monday, the gain was wiped out the very next day as Nepse retreated by 2.78 points.

The local bourse remained downbeat for the remainder of the week, falling by 5.17 points on Wednesday and shedding 1.86 points on Thursday to close the week at 1,224.04 points.

In the review week trading, hotels, finance, mutual funds and manufacturing subgroups recorded gains. Trading sub-index advanced by 4.81 per cent or 12.41 points to land at 270.26 points, with share price of Salt Trading Corporation up Rs 48 to Rs 575.

The hotels sub-index went up by 0.79 per cent or 16.21 points to 2,047.01 points and finance subgroup inched up by 0.40 per cent or 2.52 points to 623.29 points. Mutual funds was up 0.20 per cent or 0.02 point to 9.96 points, while manufacturing sub-index saw marginal gain of 0.01 per cent or 0.26 point to 2,576.34 points.
On the contrary, hydropower subgroup was biggest loser of the week, plunging by 2.46 per cent or 27.44 points to 1,084.11 points. Others sub-index also went down by 1.48 per cent or 10.50 points to 698.87 points.

The banking subgroup took a dive by 1.39 per cent or 15.58 points to 1,102.46 points and non-life insurance fell by 1.29 per cent or 64.05 points to 4,894.04 points.
Life insurance slipped by 0.68 per cent or 40.09 points to 5,802.69 points and microfinance sub-group dipped by 0.44 per cent or 6.84 points to 1,517.15 points.

The development banks subgroup fell by 0.14 per cent or 2.34 points to 1,592.74 points. In the review week, Machhapuchchhre Bank was the leader in terms of weekly turnover with Rs 193.13 million. It was followed by Rasuwagadhi Hydropower with Rs 110.82 million, Laxmi Bank with Rs 96.57 million, Nepal Bank with Rs 71.05 million and Sanjen Jalavidhyut Company with Rs 67.57 million.

In terms of weekly trading volume too Machhapuchchhre Bank was the forerunner with 756,000 of its shares changing hands. It was followed by Rasuwagadhi Hydropower with 525,000 shares, Laxmi Bank with 449,000 shares, Sanjen Jalavidhyut with 298,000 shares and Prabhu Bank with 223,000 shares.

Meanwhile, Rasuwagadhi Hydropower topped in terms of number of transactions with 14,460 transactions. It was followed by Sanjen Jalavidhyut with 13,274, Upper Tamakoshi Hydropower with 795, Infinity Laghubitta Bittiya Sanstha with 793 and Nepal Investment Bank with 769 transactions.

New listings
Company Type Units
Nepal Investment Bank Ordinary 2,798,419
Surya Life Insurance Bonus 1,358,280
Source: Nepse

The post CGT dispute a drag on investor sentiment appeared first on The Himalayan Times.

Written by Ankit Khadgi
This news first appeared on https://thehimalayantimes.com/business/cgt-dispute-a-drag-on-investor-sentiment/ under the title “CGT dispute a drag on investor sentiment”. Bolchha Nepal is not responsible or affiliated towards the opinion expressed in this news article.