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From the dawn of the civilization, people have been obsessed with the means to ensure cent percent certainty for any future undertaking. Uncertainty means unforeseen disruptions in meticu­lous plans people have developed and followed. People’s fascination with astrology, tarot cards and crys­tal ball, all point to their obsession to reduce unpredictability. This holds true with respect to the equity market as well. Investors/traders would do anything and every­thing to see the future. With the passage of time, different scientific and logical alternates have evolved in place of mysticism. ‘Fundamental analysis’ assesses the financial health of a company itself. It is all about looking inside the company’s financial reports to find answers. It evaluates the trend of revenue generation: is there con­stant revenue growth every quar­ter or erratic growth pattern over the quarters, or is there a negative growth? There might be a growth in absolute numbers which will make a normal person happy. But while comparing quarter-to-quarter growth rate with the same absolute numbers, the analyst might see that the growth is decreasing.

Now, the conclusion derived and the decisions made will be totally different for the normal person and the person analyzing the quarterly reports. Revenue analysis alone might depict healthy picture but if the cost of operation is huge, it will make a big dent in net profit. Nepali commercial banks have been issuing long-term debentures at an average rate of 10 percent annual return. This is reflected in their cost of capital over a long timeframe. A few of them have increased the volume of nonperforming assets too.

This calls for more provisioning requirement and will be a disen­chantment for calculated risk-tak­ers. In summary, fundamental analysis is all about understanding how much return the company can give back to investors. This is about computing intrinsic or real value of the company’s stock. Once the investor measures the intrinsic value of the stock, s/he can weigh if it is undervalued or overvalued in com­parison to the current market price of the stock.

‘Environment analysis’ looks at the external factors affecting the industry and the company itself. These include the political situation, policy decisions, the country’s mac­ro-economic condition, changing social dynamics, and technological advances. Business and economic broadsheets, magazines as well as online media are heavily focused on reporting and analyzing these exter­nal environmental factors. Large number of Nepali investors keenly follow them and base their invest­ment decisions accordingly.

‘Technical analysis’ examines the past market rates and traded vol­ume of stock in order to predict its future price movement. It combines market psychology with quantita­tive techniques. Technical analysis is based on the assumption that the market has processed all rele­vant internal and external available information and these are already reflected in the pricing chart and statistical indicators. Stock traders mostly apply these tools to identify entry and exit points for their trad­ing set-ups.

Professional day-traders depend more on technical analysis tools and consider information from fun­damental analysis and environmen­tal factors as a noise which create prejudices and misguide their cal­culations. Using technical analysis in Nepali equity market has been a new phenomenon. People are still not fully aware that it is a process of calculating probabilities to predict the price action at specific points and not a crystal ball to provide them with full-proof answer for their future undertakings!

Ravi Singhal and Prakash Neupane, two techie friends, used to have great difficulty finding a cab to get around Kath­mandu. And they used to wonder why no one in Nepal had thought of ride-hailing apps; after all, there were already many of them in India. It was with this realization that they came up with the idea of Sarathi. When they started their private company in 2016, they had 50 taxis. Now Sarathi has 1,500 taxis provid­ing services through the Sarathi app. You can now book a taxi through the app, a model that was intro­duced only this January. Before that, customers had to call 4217171 to book. They would give a pickup and drop locations and then a taxi was sent to the pickup destination. All the taxis ran on meter.

Ajay Poudel, who leads Sarathi, informs that earlier the custom­ers would be picked up from their locations and had to pay by the meter. “However, the fare was not always the same due to traffic jams. So when we introduced the base model earlier this year, we took the average of the meter rate and we made fixed rates for certain dis­tances. The customers can see the routes and fares when they book a taxi on Sarathi,” says Poudel. Sarathi has since its inception been taking 10 percent of the total fare from its drivers.

Sarathi had started small, and the founders didn’t know what they were getting into. “We failed to do our homework and did not antic­ipate so many customers,” shares Poudel. They were getting around 400 calls a day but only had 50 taxis and had to turn down many rides. The model needed to be changed.

The 50 taxis at the start were their own taxis. But now any taxi driver can download the Sarathi app and join. “Before this year, we were unable to come up with a system to include other taxis,” says Poudel. The new model can potentially accommodate all 10,000 taxis running in Kathmandu in the system. Poudel says they now have taxis in each chowk of Kathmandu. Right now there are 1,500 taxi driv­ers working with Sarathi, making a total of over 350,000 rides. By April 2020, the app developers plan to partner with another 1,000 taxis.

Although Sarathi is an app-based company, it still offers the option of booking a cab by calling. “Not everyone has a device with internet. Some have trouble using the app, and internet might be expensive for some. So we still get booking calls,” says Poudel. Most bookings these days are made through the app though. Every day, a minimum of 1,200 rides are booked through Sarathi, Poudel informs.

Poudel says Sarathi has been able to grow as customers believe it ensures a hassle-free trip. Before, they needed to walk a certain dis­tance to find a taxi, and haggle if the taxi drivers did not agree to go by the meter. But a taxi is only a phone call (or a tap) away now.

Raj Kumar Chaulagain, a Sarathi driver, gets 10-12 rides from Sarathi app every day. He says it is has­sle-free for drivers too as there are fixed rates and no haggling. “Before, customers used to haggle even for Rs 5 and now they give Rs 40 in tip,” he says. There is the added advan­tage of booking customers from the comfort of his home. Before, he had to wait long hours on the road.

Sarathi provides free Basic English language classes and teaches drivers how to use Google maps so that they can use the app easily. Poudel hopes each Sarathi driver will soon be able to earn Rs 50,000 a month just through the Sarathi app.

Now there are also other ride-hail­ing apps such as Pathao and Tootle in the fray as well. In the case of Pathao, cars double as taxis, says Poudel. Taxis have to get route per­mits and pass certain tests, and the cost of running a car is also lower than running a taxi, he emphasizes. “Still, their rates are higher than taxis on meter. I do not understand how the government allows this,” says Poudel. Yet he believes compe­tition is good and more ride-hailing apps such as Pathao and Tootle are the need of the hour

Back in 1970, Jim Morrison crooned, “The future’s uncertain, and the end is always near.” This continues to be the truth and the only truth. They say, there are only two certainties: change and death. Change might be planned but mostly we have seen it being forced upon. The unwanted and unplanned change brings chaos in our structured life. This columnist talked of the hedging mechanism against such sudden changes in the form of insurance coverage in the previous issue. Rather than waiting for a disaster to fall upon us, parting with a small premium works as a stitch in time.

There are two broad categories of insurance products available in Nepal. They include the general or non-life insurance and the life insurance policies. The personal risks associated with accident, health issues, fire, arson, riot, and terrorism are covered by non-life insurance products. Also, the risks arising from the natural calamities of flood, landslide, storm or earthquake are covered by non-life insurance. In a nutshell, non-life insurance covers people, property, or legal liabilities.

If you want to hedge against a particular non-life risk, you can opt to buy the insurance product by paying a one-time premium. The coverage will last for a maximum of one year. The premium paid on vehicle insurance or property insurance or accident insurance covers the risk for one year. If you want to continue the coverage beyond the first year, you will need to renew the product by paying the premium for the second year too. In the case of travel insurance, the premium covers the travel risk of a minimum one week.

The premium for travel insurance is calculated based on the timeframe of risk coverage. This (the premium) is again paid one-time before the travel. If some unwarranted thing happens during the insured period, the premium will look minuscule in comparison to the insurance pay-out. Instead, if everything goes smooth, the premium paid will be an expense for the insured party. In the case of general or non-life insurance, the premium paid is purely an expense to avert the unexpected drainage of savings.  

Traditionally, life insurance covers the risk of the policyholder’s death. The insurance company pays a nominated beneficiary—normally the next of kin—an agreed amount upon the death of the policyholder. In return, the insurance company charges premium. This premium could be paid as one lump sum, just as in non-life products, or divided into smaller portions paid at regular intervals.

Today, life insurance companies have diversified their products by merging the concept of traditional life insurance with the long-term saving concept of annuities and credit function of the banking and financial institutions. This provides the policyholder an option of either transferring the benefit to the nominated beneficiary or to receive the return himself/herself after certain time.

The major contrast with life insurance concerns forced saving. The premium paid for life insurance is returned to the policyholder along with some sort of interest top-up, normally called bonus. Life insurance not only hedges against the risk of untimely demise of the policyholder (or the nominated beneficiary) but also the provision of premium-plus return after the mutually agreed timeframe.    

CWIN Nepal, an NGO which works to protect vulnerable children, used to have a mini-problem every time they organized some event: Where do you dispose the banners used at these events?

Then Rushka Sthapit, who used to work as an environmental officer at the office, came up with an ingenious solution: Why not make bags out of these banners? Thus started the story of Metta, which collects banners from events, makes useful products out of them, and sells them.

When she and some CWIN volunteers started making bags, they made only simple bags from CWIN cloth banners. Then they thought of making bags out of flex banners too. “Flex is a more toxic form of plastic. What we are trying to do is prolong its lifespan,” says Sthapit.

At the start in 2012, six women aged 20-26 years, who were identified by CWIN as “Youth In Need” were trained for the job. The bags they made were sold only within CWIN’s networks and the earnings given to these needy women, in an initiative that came to be known as “Banners to Bags”.

In February 2019, they changed their name and registered the company as “Metta” and are now commercializing it. Why? “Because it deserves greater commercialization,” says Sthapit. “The idea has not fizzled out after it started in 2012.”

Now you can buy Metta keychain pouches, clear bags, folders, box toiletry bags, side bags, and laptop bags which are sold via their Facebook page. Currently, they produce 80 products a month, with their best-seller being a bio-gas bag priced at Rs 300, informs Sthapit. This durable bag is made of material that used to be parts of bio-gas container.

Even though the Metta product prices are affordable—ranging from Rs 150 for keychain pouches to Rs 700 for side bags—they are struggling to capture the market. Sthapit says making customers understand that they are recycling flex banners which are otherwise very harmful to the environment requires a lot of patience. Nepali customers are not as enthusiastic as she would like them to be. “There are similar, competing products. The only thing that is different about us is that we recycle banners. But when we tell this to Nepali customers they give off “So what?” kind of vibe,” she adds. Thus most of their customers right now are expats. Sthapit says Nepalis’ perspective on why they should buy their native and sustainable products is changing “but very slowly”.

Another challenge is collection of banners from an event. Usually, all events organized in Kathmandu use banners, says Sthapit. She informs that when event organizers are asked to keep the banners, they agree to do so. But when they reach the event venue, they find that the banners have already been torn down and discarded.

“Keeping the banners safe is one extra thing for the organizers and they usually don’t bother,” says Sthapit. So, Metta collectors try to get there as soon as they can.

Events like the BIMSTEC summit in August 2018 generate potentially countless banners. Couldn’t banners from such official functions have been sourced through the government, for instance? Sthapit says it’s the same story. “Those who work at the level of handling these banners, including those from government officers, are least bothered about recycling or the environment,” she says.