The Nepal Stock Exchange (NEPSE) saw a strong surge in weak companies after the 15-minute average rule for calculating NEPSE indices and trade prices was suspended.
Struggling firms rebound
Banks and financial institutions with low net worth, poor earnings, limited distributable profit, and high bad loan ratios, along with other weak companies, have seen their share prices rise rapidly. This comes after months of slower movement under the 15-minute rule.
Why the rule mattered
Five months ago, NEPSE introduced the 15-minute average system following Securities Board directives to curb manipulation in companies with low share supply. While this reduced some unfair trading, it also lowered investor confidence.
After the Gen Z protests weakened market sentiment further, the Securities Board decided to suspend the 15-minute rule. NEPSE then reverted to the previous method of calculating indices and share prices.
Impact on the market
The old system’s return has activated trading groups that had slowed down. On Tuesday, NEPSE rose about 59 points to 2,682, with over Rs 529 million traded. Several companies hit positive circuit limits, including:
- Banks and financials: Saptakoshi Development Bank, Green Development Bank, Narayani Development Bank, Sindhu Development Bank
- Hydropower & energy: Joshi Hydropower, Geogol Energy, Asian Hydropower, Himstar Energy
- Others: Kalika Power, Sayapatri Hydro, Mahila Laghubitta
The market shows that even struggling firms can rally fast when rules change and investor confidence shifts.
