Nepse plans to launch Nepse 30 index

After failing to launch the ‘Nepse 50' index, Nepal Stock Exchange (Nepse) is now planning for the 'Nepse 30' index. Making public the draft for the 'Nepse 30' index, Nepse has sought opinions and suggestions from the concerned stakeholders. The Nepse 30 index is also being created as a value-weighted index based on market capitalization by integrating free-float shares in the market. Nepse has envisioned Nepse 30 as an index based on the share trading of 30 selected companies. The new index will comprise the top 30 companies that meet the criteria set by Nepse among all the listed companies.

However, Nepse 30 will not be a separate index. At present, there are 13 sub-indices in Nepse alongside sensitive, float, and sensitive float indices.  According to Nepse, companies from six sectors including banks and financial institutions, microfinance, insurance, hydropower, manufacturing, and trade & services will be included in the Nepse 30 index. Each of these sectors will have a minimum of one company to a maximum of eight companies in the index.

Companies having profits in the last three years, having earnings per share of more than 10 percent of the paid-up capital, and having earnings per share higher than the inflation will be eligible for the 'Nepse 30'. Similarly, the companies are also required to have issued at least 25 percent of the shares to the general public and have at least 20,000 shareholders. Similarly, companies' average daily turnover in the last six months should be at least Rs 2.5m, and their average daily share trading of 5,000 units. The Nepse has said that it is introducing 'Nepse 30' with the aim of developing, operating, and managing indices to strengthen secondary market transactions. The Nepse 30 index will be implemented as an index based on market capitalization including immediately tradable (free float) shares. Nepse had previously prepared to bring the 'Nepse 50' index. However, it has now proposed 'Nepse 30' arguing that there could be problems in managing 50 companies. "We have prepared to bring Nepse 50. However, we studied all aspects and reached a conclusion that would be appropriate to bring 'Nepse 30' for now," said Murahari Parajuli, Spokesperson of Nepse.