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The price of gold has increased by Rs 600 per tola in the domestic market on Sunday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 119, 200 per tola today. It was traded at Rs 118, 600  per tola on Friday.

Meanwhile, tejabi gold is being traded at Rs 118, 650 per tola. It was traded at Rs 118, 050 per tola.

Similarly, the price of silver has increased by Rs 20 and is being traded at Rs 1,420 per tola today.  

Reinsurance and non-life insurance companies are gradually diversifying their investment portfolios. Nepal Reinsurance Company has invested Rs 20.36bn in various sectors, according to the company’s financial disclosure for the first quarter of 2023/24. Similarly, the other reinsurance company in the country, Himalayan Reinsurance, is also gradually diversifying its investment portfolio. The company, which recently went public, has invested over Rs 10.13bn.

The Nepal Insurance Authority has outlined investment guidelines for reinsurance companies in the Investment Guidelines for Reinsurance Companies, 2023. According to the guidelines, reinsurance companies are required to invest a minimum of 20 percent of their investment portfolio in treasury bills and bonds of the federal, provincial, and local governments, as well as the central bank. Nepal Reinsurance Company has invested Rs 300m in these instruments. However, Himalayan Reinsurance Company hasn't made any investments in these instruments, even though government bonds are considered one of the safest investment sectors.

Additionally, reinsurance companies must invest at least 30 percent of their investment in fixed deposit schemes of commercial banks. The two reinsurance companies have parked a combined Rs 23.22bn in fixed deposit accounts in different commercial banks. Since bank deposits are considered a safe sector for investment and also yield interest regularly, reinsurance companies are attracted to fixed deposit schemes of banks and financial institutions.

Nepal Reinsurance Company has also invested Rs 2.02bn in fixed deposit schemes of development banks and financial institutions. However, Himalayan Reinsurance hasn't invested in fixed deposits of development banks and financial institutions yet. Although reinsurance companies are allowed to invest 10 percent of their total investments in the real estate sector, they haven't made such investments yet, considering the associated risks.

Reinsurance companies are also allowed to invest up to 10 percent of their total investments in primary shares. While Nepal Reinsurance Company has invested in primary shares worth Rs 588.9bn, Himalayan Reinsurance has only put Rs 62m in such investments. Reinsurers are allowed to invest a maximum of 20 percent of their total investment in preference shares, bonds, and debentures, etc, of banks and financial institutions. Nepal Reinsurance Company has invested Rs 1.87bn in such instruments, while Himalayan Reinsurance has invested Rs 1.39bn.

Similarly, reinsurance companies can invest up to 20 percent of their total investments in bonds and debentures of companies listed on Nepal Stock Exchange (Nepse). However, the two companies have not invested in these instruments yet. They are also allowed to invest a maximum of 10 percent in companies involved in agriculture production and distribution, cold storage, tourism, hydropower, solar energy, cable cars, roads, electricity transmission lines, education, and the health sector. However, these sectors have not been able to attract investments from reinsurance companies.

Instead, they are attracted to Citizen Investment Trust and mutual fund schemes. Nepal Reinsurance and Himalayan Reinsurance have invested Rs 50.9m and Rs 40m, respectively, in these schemes.

Although they are allowed to invest a maximum of 5 percent of their investment in shares of investment companies, they haven't made any such investments so far. Nepal Insurance and Himalayan Reinsurance, however, have invested Rs 102.6m and Rs 225m, respectively, in promoter shares of these companies. Nepal Reinsurance has invested Rs 503.6m in companies that aren't listed yet. Himalayan Reinsurance hasn't made any such investments so far.

Likewise, non-life insurance companies have made a combined investment of more than Rs 60bn, according to their financial disclosures for the first quarter. Nearly Rs 48.5bn of their investment is in fixed deposit schemes of different banks and financial institutions.

Fourteen non-life insurance companies in the country have invested a total of Rs 60.51bn in different sectors, according to the Nepal Insurance Authority. A lion's share of this investment is in fixed deposit schemes of banks and financial institutions. Non-life insurers have invested a total of Rs 42.79bn in fixed deposits of commercial and infrastructure development banks. Similarly, they have invested Rs 5.36bn in fixed deposit schemes of development banks and Rs 1.49bn in deposit schemes of finance companies.

The Investment Guidelines for Non-life Insurance Companies, 2023, has fixed investment limits for non-life insurance companies while also specifying investment sectors. According to the guidelines, they can invest 30 percent of their total investment in fixed deposit schemes of commercial and infrastructure development banks, 10 percent in development banks, and 5 percent in such schemes of financial institutions.

Likewise, they are required to invest a minimum of 20 percent of their total investments in bonds and debentures of the federal, provincial, and local governments, as well as Nepal Rastra Bank. However, only eight out of 14 non-life insurers have complied with this requirement. The Oriental has invested Rs 70m, National Insurance has allocated Rs 129.5m, Prabhu and Siddhartha each have invested Rs 5m, Sagarmatha Lumbini has contributed Rs 6.5m, and IGI Prudential has invested Rs 4.35m in these instruments.

While they are allowed to make up to 10 percent of their total investment in the real estate sector, the non-life insurers haven’t made any such investment yet. These companies are allowed to invest a maximum of 10 percent of their total investment in primary shares of listed companies. Twelve companies have invested Rs 3.16bn in primary shares. The Oriental and National Insurance haven’t invested in primary shares yet. Similarly, eight non-life insurers have invested Rs 2.75bn in bonds and debentures of listed companies. 

Non-life insurance companies are also allowed to invest in agriculture companies, cold storage facilities, tourism, hydropower, solar energy, cable car, roads, transmission lines, education, and health sectors, etc. Non-life insurers, however, aren't attracted to this sector much. Only Prabhu, Shikhar, Sagarmatha Lumbini, and IGI Prudential have invested a total of Rs 417.50m in these sectors.

“It is natural for any company to choose a risk-free sector while investing its capital. However, we suggest the companies pay attention to the diversification of investments as it spreads the risk,” Shambhuraj Lamichhane, head of the legal branch of the Nepal Insurance Authority, said. “We suggest companies not to put all eggs in one basket while making investments. Investment should be distributed in different areas.” According to Lamichhane, while investment in fixed deposit schemes and banks and debentures is safe, insurance companies have also invested in other sectors like real estate, which has risks.

The authority has also allowed investment companies to invest in sectors like aviation, which is also considered risky.

The price of gold has increased by Rs 300 per tola in the domestic market on Friday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 118, 600 per tola today. It was traded at Rs 118, 300 per tola on Thursday.

Meanwhile, tejabi gold is being traded at Rs 118, 050 per tola. It was traded at Rs 117, 750 per tola.

Similarly, the price of silver has dropped by Rs 10 and is being traded at Rs 1,400 per tola today. 

Economic growth in South Asia is estimated to have slowed slightly to 5.7 percent in 2023, yet it remains the fastest among emerging market and developing economy regions, according to a new report published by World Bank. This is largely attributed to a robust expansion in India, which accounted for more than three-fourths of the regional output in 2023. Excluding India, however, activity was more subdued.

In India, despite some slowing, a strong performance in 2023 was driven by robust public investment growth and vibrant services activity. Merchandise exports slowed due to weak external demand, but domestic demand for consumer services and exports of business services sustained India’s economic growth, according to the report.

In Bangladesh, growth is estimated to have slowed in the fiscal year 2022/23 (July 2022 to June 2023), as activity was hampered by import restrictions and rising material and energy costs, as well as mounting external and financial pressures. 

Output in Pakistan is estimated to have contracted during the FY 2022/23. Inflation remained elevated, partly reflecting large currency depreciation in early 2023. However, towards the end of 2023, Pakistan's currency exhibited signs of stabilization. 

Output in Sri Lanka is also estimated to have declined in 2023, while there has been progress in sovereign debt restructuring. In Afghanistan, despite declining food prices in 2023, poverty rates remained high, exacerbated by strong earthquakes in October 2023.

Growth in South Asia is expected to edge slightly lower to a still-robust 5.6 percent pace in 2024, before firming to 5.9 percent next year. Domestic demand, including public consumption and investment, will remain major drivers of economic growth. A pickup in external demand, albeit still subdued, is also expected to contribute to growth, the report says.  

In India, growth is expected to edge up to 6.4 percent in the FY2024/25 (April 2024 to March 2025) after softening to 6.3 percent in the FY2023/24. Investment is envisaged to decelerate marginally but remain robust, supported by higher public investment and improved corporate balance sheets.

In Bangladesh, growth is forecast to slow to 5.6 percent in the FY2023/24. Inflation is likely to remain elevated, weighing on private consumption. Import restrictions are expected to continue and impede private investment.

In contrast, growth is projected to pick up in Nepal, with monetary policy easing and the delayed effects of lifting import restrictions, the report says.

The report further says: “The outlook in Pakistan remains subdued for FY2023/24. Monetary policy is expected to remain tight to contain inflation, while fiscal policy is also set to be contractionary. The outlook in Sri Lanka remains uncertain, amid debt restructuring negotiations, particularly with private creditors.” 

Investment related to the tourism sector will support growth in the Maldives, while the commissioning of a new hydro plant in Bhutan is expected to contribute to a pickup in growth in the next fiscal year.

The World Bank has also explored some risks as well. The report says: “Risks to the forecast remain tilted to the downside, with the most pressing concerns revolving around higher energy and food prices caused by an escalation of the conflict in the Middle East and adverse spillovers stemming from larger-than-expected increases in policy rates in advanced economies.” 

In addition, elevated external and fiscal financing needs, the growing frequency and severity of extreme weather events, and sharper-than-expected growth slowdown in trading partners also pose risks to the region. Heightened uncertainty around elections in 2024 in some countries is also a downside risk in the region. However, the implementation of growth-friendly policies after elections could improve growth prospects.