Over half of listed firms in elite group

KATHMANDU, FEB 13, 2012

Though share market has been performing poorly since last three year, Nepal Stock Exchange (Nepse) has been witnessing companies upgrading to Class A institutions, along with rise in the number of listed companies.

In the current fiscal year, some 26 new listed companies graduated to Class A making a total of 133 companies. Over half of the listed companies now falls in the elite group, according to the Nepse. In the last fiscal year, some 117 listed companies were under the Class A category from the previous fiscal year’s 94 companies. “Some 10 companies were delisted and two commercial banks, 16 development banks, two insurance companies, and six finance companies — 26 listed companies — climbed to the Class A institutions, out of the total 209 listed companies in the secondary market, it said,” adding that annually the Nepse has been classifying the listed companies in Class A, according to the international standard, though internationally credit rating agencies like Standard and Poor’s and ICICI ranks the listed companies in the global share market. In the domestic secondary market, the Nepse classifies the listed companies on the basis of paid up capital, number of shareholders, duration of profit making, book value, and on time reporting system. “A company that has minimum of Rs 20 million paid up capital, over 1,000 shareholders, making profit since last three consecutive years, has more book value than the market value and has been reporting within the six months from the ending of the fiscal year could graduate in the Class A category,” according to the Listing Regulation.

“But the classification should be more pragmatic and done by independent rating agencies,” according to a senior market analyst Rabindra Bhattarai, who opined that the current classification has become an ‘annual ritual’ only.

“The current classification criteria is based on over a decade old regulation which is not practical in the current market scenario.” The domestic market neither has any reliable credit rating agency nor our investors’ have financial literacy forcing the front line regulator itself to become more update and investor-friendly classifications, Bhattarai added.

Source: THT