New government's economic policy

Rajesh Sharma

UML's economic policy is not much different from the policy the previous governments in the recent past followed. A mixed economy with strong emphasis on private sector will continue. However, there are specific issues that may create some road blocks. These are small issues but are important at micro level. Among such small issues, one example could be that of increase of paid up capital of banks. Now, finance ministry going to UML and some bankers from UML background trying to make changes in NRB directive may create tussle between finance ministry, if it will listen to some UML law makers and the NRB. If NRB resists, finance ministry could be unhelpful or obstructive in this issue. If NRB buckles down, investors will suffer. This type of issues may crop up. Otherwise, I think, there would be no big difference in policy.

EBL and 30% bonus

Rajesh Sharma

I read some reactions about EBL's proposed 30% bonus shares. For years, EBL and CHCL were darlings of traders. Hence, their retention rate was very low. (Please read my post of 2012 onhttps://sharenepalcomments.wordpress.com/2012/09/19/111/.) These scrips were sold more times than others.

After Ghising episode, CHCL has lost the charm for the traders. EBL has attraction still. 30% bonus share is not a small return, but people are not happy. There is big gap between expectation and reality. The expectation from EBL was sky high.

For the healthy growth of a company, it is always better to grow in a sustainable way in three major areas - good governance by following best practices, costumer satisfaction through excellence in performance and good return to investors. If the growth affects one among the three areas, the company starts to invite trouble.

All small investors both long term and short term should understand the bitter fact that the board made out of promoters primarily will serve the interest of promoters and I believe that is normal. We retail investors should accept the limitation that we may not have any significant influence on promoters' decisions. They will not give us a single penny more than what matches their interest. This is not only applicable to EBL. We should have leveled our expectation that has this factor considered.

Now, coming to 30% bonus, it is very good return indeed. How they will reach to 4, 6 and 8 Arabs, certainly they might have plan. This 30% is from last year profit, and they may capitalize their independent reserve some time this year by issuing additional bonus shares and get that 4 Arab, or they may go for acquisition and/or merger and reach to that level. There are plenty of options. As a retail investor myself that of EBL, I am not unhappy with their proposal. We are different and our expectations are different. So, some of us could be unhappy and that is perfectly understandable.

Do not add salt to injuries

Rajesh Sharma

A builder had constructed a housing colony.and had handed over the residential units few years back transferring the ownership to buyers. By the earthquake of last April, there were cracks in several units. The residents staged protest in front of the office of the builder. Surprised by the behavior of the residents, the builder asked the protesters why they were busy bringing bad name to their property? He told them that the builder has already transferred the land title and ownership of the house and by contractual agreement he has no further responsibility. So, he will not be doing anything in response to their agitation. He advised the agitators to go home, do some repair, and stay as usual there or rent it out or even sell. If they will continue such protest, nobody will rent the houses or they will not be able to sell if they wish so. On humanitarian ground, he said that he will donate small amount of money to support the repair as donation to earthquake affected family.

Initially, the residents were divided but finally they realized that the agitation will harm their interest and called off the agitation. They silently got their units repaired and even said to outsiders that they were lucky as their units were spared by the earthquake. Only some plaster had cracked that too in a few units. Strangely, their paradigm shifted.

But, this story may not be that much applicable in share market. The share holders are not that naive. Mostly the people who pass extreme negative remarks are the buyers in waiting. If anybody who is inflicting injury and cursing the company the shares he or she holds of, should learn from the above story.

Some Notes

Rajesh Sharma

1. Though, it is not in the interest of traders, for long term sustainable growth of a company and maintaining or improving its profitability, controlling the flood of bonus/rights shares is a healthy strategy.

2. The companies may not stick 100% to the plan they have submitted to NRB. That is a broad framework of growth plan not a law that they have to abide by. That is simply a guideline and expression of their intention how they like to proceed ahead to meeting their paid up capital requirement.

3. As traders, we should look at the trend in the market and that is natural. But for investors fundamentals of a company and the change or possible change in operating environment - political and economic both are most critical factors to look into. If increase of paid up capital affects company's performance in the interim, we should plan for long term or should change the sector such as from BFIs and insurance to hydro, manufacturing, etc.

4. I have received some good number of queries about the future of SCBN. I tried to get some inside perspective and it was too difficult but there is ease at all levels. No panic, no insecurity among executives and other personnel. Hence, now I believe that SCBN will go for continuing its business in Nepal for long. If they will not be ready for injecting new money, they could sell SCB's 24% as FPO (SCB has 75% share in SCBN including that of Grindlays bank) and put that money together with some independent reserve and some bonus shares, SCBN could meet the capital requirement easily. Hence, I believe, it will stay here.

I welcome other friends perspective on issues mentioned above.

Market and Nepali press

Rajesh Sharma

I am sorry for making this my view public about journalists and media but I thought it to share with friends.

The journalists in Nepal are three types - principled, mobile and pressurized.

The first type are not many in number and are mostly not in good book of media barons. They are a bit comfortable financially and could stand on their principles.

The second type are always looking around for a few bucks to get as gift from heaven.

The third type are, perhaps, honest and dedicated but are in financial difficulties. They know but could not resist the pressure of the lords of the media - the owner.

The BIG media houses are really not part of the fourth state, they are out right businesses. They do not run TV or newspapers or journals or portals for a noble or greater mission but run the enterprises as profit ventures. Many smaller ones have also the same nature.

Hence, these types may keep eye always open to grab financial benefits out of news, views or other press products.

Like others, journalists or media from financial or economic aspects are also in business of manufacturing news and events. Therefore, credibility of media and the journalists in Nepal has eroded to a large extent.

So, when we think to share some information, let's quote the source. Quoting source primarily is not to prove but to provide other readers the credibility range of the news by aligning with the credibility graph of the source.

In share market, news has major influence and market like ours are full of rumors spread as news. Believing is highly costly than non-believing most of the time. Personally, I do not believe till I know the primary source of any vital information.

Story

Rajesh Sharma

A Fiction

(Below, please read a piece of fiction, an outcome of creative imagination.)

An Indian Daroga (Junior Police Officer) in Raxual had snatched some money from a driver for some minor fault. It was enough for him for buying a bottle of local Sarab (alcoholic drink) for the evening that could provide enjoyment for him and his friend. But, he was in need of money to arrange titbits (snacks). He was looking a prey for this. He saw suddenly a tanker coming carrying fuel of Nepal Oil Corporation. He stopped that tanker and started to offer threats to the driver. The driver was also an Indian and had thick skin. There were arguments and counter arguments and the tanker was standing. By the time the settlement was made for a bribe of small amount, a Twite from Birgunj saw that scene passing by it.

Without wasting a second, when he reached Birgunj, he twitted that a tanker has been stopped in Raxual by Indian police. A twite in Kathmandu improved the text a bit and twitted that several trucks and tankers are blocked in Raxual by Indian authority.

Another Twite improved the information further and twitted that India has blocked all goods coming to Nepal. Beelines of trucks are blocked in Raxual and in other boarder areas.

Two national leaders knew this information from the tweet and appeared in national television to inform public at large what would be their stand. They said separately that they are ready to go to any lengths including strongest form of protest (meaning war) against India to protect the national interest. Another said it would be counterproductive and India would suffer. They were ready to ride on the bicycle if embargo would be imposed. 

Knowing the strong reactions from the big leaders the youth intellectuals started bombarding with several twits and collectively a hastag was making round world over. Pakistani intelligentsia got good friends among Nepalese Twites. The hastag was trending as leading one.

The Nepali custom department unaware of such big movement going on said in the evening that the movements of goods were as usual normal. 

Note (Non-fiction) - India is a hegemonic power in the region and does many bad things. But, we should oppose its moves, which are real. Otherwise, we will fail to protect our national interests.

Merger: Three Major Obstacles

Rajesh Sharma

Merger: Three Major Obstacles
1. Human resource harmonization - This is crucial. From CEO to Junior Assistants or even below need harmonization. A few days ago, people were spreading rumors about X company merging with Y or Z company. This is too difficult to get human resources of two or more different brand value companies at par. Hence, that harmonization could be possible with same or closer brand value companies. For example, EBL, SCB and Nabil may be closer candidates for harmonizing human resources. But, their identity factor is too strong to submerge. If they agree to merge, there would an excellent new bank, perhaps. However, for banks like Janata, Mega and Civil, it could be possible to harmonize barring the CEOs/Chairpersons/board members etc. The persons in these dominating and high profile positions are another major obstacles.
Therefore, talking merger is simple and attaining merger is too difficult. That also has already been seen in several merger cancellations.
2. Harmonizing capital through mutually agreed upon swap ratio - This is another road block. The share holders want a larger pie and show different parameters, not only sticking to net worth. The picture captured during signing "Letter of Intent" for merger becomes unrecognizable when the actual merger decision need to operationalize. In the past also a few mergers have been cancelled due to this factor.
3. The national disease, the power politics - We have banks influenced by different political parties, their leading cadres/membership card holders and their stooges. Rather than taking decisions on merit of merger, they start tricks, tactic and strategies to controlling the new entity. By extension of dominance of power politics, we have also certain communities such as Newars dominating one bank, Marwadis the other and another in other one. This is another hindering factor that blocks merger. Here, one option is that the birds of same feather fly together. The AMALE banks be one AMALE bank, The Marwadi promoted banks be one Mawadi promoted bank ,etc. This picture sounds bizarre and some friend may blame me for projection of illusory division, but in practice, we have been seeing such divisions. Hence, we have banks of different feathers. One good thing is that we have majority of BFIs, which are politically independent. They could go for merger provided that the other obstacles have been removed.
Note: This is just my opinion not substantiated with data - qualitative or qualitative. Also, I invite friends to contribute their opinions.

This time politics

Rajesh Sharma

India Factor and Keeping OUR House in Order
I read the statement issued by India immediately after the promulgation of the constitution. It clearly states the relation between Nepal and India in bad shape.
1. In the past, we fought war against British-India during 1814 -1815. This resulted to loss of large parts of Nepali territories and end of probable expansion of Nepali state.

2. In 1950, the Rana dynasty did not succumb to Indian pressure initially and they had to relinquish power.

3. In 1989, King Birendra and his Panchayati orderly Marich Man dared to take Indian bull by its horn and the end result was disappearance of Panchayat and absolute power of the king.

4. During 2005 -2006, Gyanendra defied Indian whip and lost his monarchy.

Barring the first, India blended its role by being together with Nepali popular movements for democratic aspirations.

Now in 2015, once again India sounds anti-Nepali establishment and this time too its role is being blended with Nepali mass movement launched for equity and justice.

The strange phenomenon this time is that the known pro-India elements within the establishment are playing the roles of 'nationalist'. Are they covert agents and acting wearing nationalist skin or they are really changed souls? To be frank, DNAs of the roles of Oli and Sitaula in the past and during these days are not matching. Leaving this question open for answer, I will try to see what India wants in Nepal happening?

Indian attitude towards Nepal is that of a big brother. Even, sometimes, it considers the Himalayas in the north as its boarder. It has regrets, perhaps, that the Ballavbhai Patel line of annexing Nepal with India was not approved by Nehru in 1950. Hence, India, particularly its Rastriya Swayam Sevak Sangh Parivar (Family) including the Bharatiya Janata Party believes at its core that Nepal is part of their Akhanda Bharat. That Parivar controls India now. These are some given governing attitudinal aspects we have to live with and should find out our strategies to ensure our sovereignty, territorial integrity and coexistence. Hence, nether we should behave as slaves nor we should throw stones that could do nothing other than releasing our own precious energy unnecessarily.

By the above analysis we could easily understand that India has been eyeing Nepal as a prey. Is it possible India can swallow Nepal? Impossible. Is it that India intends to capture Nepal? I believe, not at all. Then what India wants? Control covertly by adopting a strategy of controlled instability in Nepal. Now, India's primary interests include harnessing Nepali water resources for its benefit, settling boarder disputes particularly at Lipulek and Susta on its favor, getting contracts of large infrastructure projects in Nepal for Indian companies, sustaining its dominant position for its goods and services in Nepal and ultimately keeping Nepal's political, bureaucratic and military leadership dancing at its music. We know what India wants. What should we be doing then?

I am not a monarchist, nor I subscribe Mahedra's dictatorial regime. However, I salute him for his endeavors for infrastructure development including the idea of East-West Highway, expansion of educational opportunities and some initiatives of social reform. Similarly, I appreciate his foreign policy particularly Nepal's relations with India and China. He did not spoke loud words; neither had he succumbed to any pressure exerted on him. His diplomacy was silent but meaningful, slow but that protected Nepal's interests. We should learn from Mahendra and we should make us stronger through silent, thoughtful and fruitful diplomacy.
Another factor is that to attain its goal in Nepal, India needs blending with our own people. This is the best way for India to interfere. To stop this happening, we should unify our people by removing injustices, inequalities and partiality. Now, we promulgated a constitution. This constitution is my constitution as a person of Khas origin, hill-resident, male, Bahun having Nepali as mother tongue, from a cow worshiping traditional family but an atheist. It did not address the issues raised by Tharus, Madhesis, Janajatis, Dalits and even that of women. From the perspective of SRI THREE BAHUNS (Koirala, Oli and Dahal) and their cronies, they may feel that they have addressed everybody's, but they lack perspectives and they lack empathy. They have become the slaves of the past and they have become the victims of conditioning. They produced a Barhmu constitution.

Now, if we like to keep India out from our business effectively, not throwing stones against India, but keeping our house in order is the need of the day.
Hence, I will not go with the constitution celebrating crowd. 'My constitution' is not what I was expecting, I was expecting for an "OUR CONSTITUTION". Many people have died and the course is continuing. In a situation of mourning, I could not celebrate.

Note: I feel uncomfortable being friends, who's expressions are anti-Madhesis, anti-Tharus, anti-Janajatis, anti-Dalits and even irrationally anti-India. So, I will unfriend them by this evening or by tomorrow. If some friends feel uncomfortable being friend with me because of my stand, please unfried me.

Blood bath in share market today

Rajesh Sharma

Milking negatives or positives, converting them into missiles or poisonous lollipops and killing many birds, tigers or even lions so as to fatten oneself are some wonderful features of Nepali capital market. On the other side, there is always a panicking or overly hurried crowd ready to participate in the process. These are not only small investors but many are medium or even big investors. Hence, now this is not limited to Big vs Small; rather this is cleaver strategist vs holly cows.

Ultimately when it became news, a few hundred trucks and some gas bullets entered Bhairahawa. At the most, it could be supply disruptions for the time being. There may not be any embargo even for a distant time. 1989 could be repeated but with difference to match with issues, intensity and time. Let's not be influenced by exaggerations by leaders, particularly like Prachanda, who could not stop without exaggerations.

Let's stay calm and do business keeping eyes open on fast changing situation. This time is though risky but equally highly rewarding too. The Mantra I believe is let's not panic, neither be in hurry. Let's stay composed look around, have glasses of water, use our common sense, use available resources, not rely on so-called planted information and decide using best of our knowledge, skills and capacities.

I have full sympathy to them who sold today and probably may sell tomorrow too.

FPO

Rajesh Sharma

y comment on Sanj Maharjan ji post regarding FPO.

The law says minimum 30% shares should be offered to general public. Also it says for joint ventures, NRB will prescribe such percentage (on case by case basis?). Hence, Joint ventures could not be forced to have 70 - 30 and other banks and BFIs are also not restricted to just 30% to public offering. Therefore, if BFIs get NRB approval, they may go for FPO (This is my opinion. I have no background in law). In this situation, when the BFIs are forced to increase their paid up capital and FPO is one such instrument, we should get better educated in this regard. I request friends with background in corporate law to enlighten us. (Please also read section 7 of the act. http://www.lawcommission.gov.np/.../banks-and-financial...).

Look before you leap

Rajesh Sharma

(Posted on FB Small Investor's Creative Ideas on 31 August 2015)

This is time to hold on emotions, stay safe from an epidemic called market rumor, look into fundamentals of companies, overcome greed of quantity of shares that could be increased heavily and to stay back and go counting on basics - basics of companies, basics of sectors, basics of the state of national economy and equally or a bit more on the basics of political upheavals.

This is a bull market and that may continue provided politics will not create havoc. But, the speed the index has moved up may loose its speed. The momentum in the market has been created not by objective factors such as political stability, enhanced and accelerated economic growth, long term favorable policy interventions and emergence of new factors that impact highly positively over the market. The major reason of the increase in index is the possibility of increase in quantity/number of shares through bonus/rights/FPO etc as the regulators - NRB and Insurance Board have asked to increase paid up capital by a few folds. This is, as such, is subjective factor and may get nullified by any type of change in policy or modification in some form.

I think, when we will start using the analytical as well as critical part of our center of reasoning located some where inside the brain, we could find out good or bad almost any time of the day or night. Right now also the same is applicable. Hence, finally, it is now absolutely necessary to do our home work properly to insure that we must not let the speeding bus go without boarding us but at the same time, we should be cautious not to have a major accident due to our hurry. Let's be rational, continue buying and selling and remain active in the market being informed, being analytical, being as objective as possible and taking calculated risk as much as possible. Rest, we should leave to market.

Merger and some speculation about EBL

Rajesh Sharma

Merger is a Jarsi milking cow for speculators. Now it is EBL and Kumari, the next could be EBL and Janata, the third could be EBL and Nabil and so many. Many finance companies and development banks will be paired with EBL, Nabil or SCB. Speculation is another form of wild ima

I have also some speculative assessment about EBL. This may be just wishful thinking or may be some salt withinn, I am not sure. In this phase of wild imagination, it is too painful to stay away. Hence, I have put a speculative scenario about EBL.

Why the Great B. K. Shrestha of EBL sold about 10% of his holding in EBL? As some have said he needs money to arrange his daughter's marriage. Strange imagination! B. K. Shrestha needs to sell shares for his daughter's wedding? Was he eating grass till now? Discovery of stupid reason.

It is clear that B. K. Shrestha needs money now. Why? One of the major reasons could be reinvestment. EBL is his milking cow and he needs money to keep his milking cow healthy and better milking. If EBL issues 1:1 rights shares, B. K. Shrestha needs 15 Corer for his 15 Lakh Kitta Shares. Now , he could have much more than 30 Lakh shares with much less than the amount he has. Is it again a stupid reasoning? I am not sure.

Punjab National Bank was interested in increasing its investment in the past. This time it has that opportunity. Why it will not put a small drop of its investment in such a hugely popular and profitable entity? This is just an unanswered question.

Why PNP and B.K Shrestha will share their hard earned brand value, goodwill, image and standing without any solid reason behind?

Hence, I believe, the merger is just the rumor spread with the intention of getting a few more pennies from heaven and they are surprisingly successful too!

Note: The above conclusion is just the outcome of some imaginative assumptions. Friends, you park your money at your own risk.

Laghubitta bikas banks

Rajesh Sharma

1. According to new NRB directive, cross holding of micro-finance companies will end with immediate effect and they have to sell their cross holding, if any, within two years.

http://bfr.nrb.org.np/…/2072_73_(For_D_Class)--Circular_3-%…

2. Number of micro-finance companies has increased fast. New "ONe Zille" development banks have this options to convert to micro-finance. The NGOs with approval to run saving-credit schemes are being converted to micro-finance companies.

3. The last blow could be spread rate on interest. If that will come into effect, micro-finance companies may loose their attraction of investors as their profitability will be decreased greatly.

Hence, we should keep our eyes open to read the possibilities and should start some precautionary acts. There is no immediate danger, but on the long run, the danger could be very real.

Note:

There were 14 one-district development banks popularly called as "one Zille bank". This is the figure of Poush 2071. They are not new banks but when the development bankers association asked NRB to allow them to be micro finance bank or laghu bitta bikash bank, the NRB has said it is positive to do so. For the details of such banks including name, location, etc, please visit:http://www.nrb.org.np/.../Profile_1_District_Level.pdf

New Bull Market

Rajesh Sharma

This is time to hold on emotions, stay safe from an epidemic called  market rumor, look into fundamentals of companies, overcome greed of quantity of shares that could be increased heavily and to stay back and go counting on basics - basics of companies, basics of sectors, basics of the state of national economy and equally or a bit more on the basics of political upheavals.

This is a bull market and that may continue provided politics will not create havoc. But, the speed the index has moved up may loose its speed. The momentum in the market has been created not  by objective  factors such as political stability, enhanced and accelerated economic growth, long term favorable policy interventions and emergence of new factors that impact highly positively over the market. The major reason of the increase in index is the possibility of increase in quantity/number of shares through bonus/rights/FPO etc as the regulators - NRB and Insurance Board have asked to increase paid up capital by a few folds. This is, as such, is subjective factor and may get nullified by any type of change in policy or modification in some form.

I think, when we will start using the analytical as well as critical part of our center of reasoning located some where inside the brain, we could find out good or bad almost any time of the day or night. Right now also the same is applicable.  Hence, finally, it is now absolutely necessary to do our home work properly to insure that we must not let the speeding bus go without boarding us but at the same time, we should be cautious not to have a major accident due to our hurry. Let's be rational, continue buying and selling and remain active in the market being informed, being analytical, being as objective as possible, taking calculated risk as much as possible. Rest, we should leave to market.

CHCL going down

Rajesh Sharma

Due to the damage caused by Radha Gyawali and earthquake, Chilime has lost its shine to a great extent. It is now not so attractive share for traders. The banking boom also negatively affected it. However, Chilime is the horse for long race. Investors would get good return if they will hold for 2 to 3 years from now. By that time Chilime's some new projects would be at final stage of completion. If not higher dividend, the higher capital gain could be there by that time and higher profit may follow in the coming years.

Busy!

Rajesh Sharma

Friends,
For the last three months, I was in some other assignments including relief work for earthquake affected people. Hence, I could not be so regular in writing comments and posts. From now on, I will try to contribute regularly.

Earthquake: Hope has prevailed

Rajesh Sharma

Today (May 22), I went to Katoun village in Manikhel VDC (3 hour drive from Kathmandu) with an objective to help earthquake affected families to build temporary shelters with zinc sheets. Our friends had resources to build about 50 temporary shelters. Although, some people criticize such design as zinc sheet tunnels, but we disagree. Till 5 days ago, the families had just a few tarpaulin sheets and all houses were damaged (either had big cracks or collapsed). In 5 days, the village was entirely different. Every collapsed or cracked house had given birth to a tiny child - a temporary shelter made out of zinc sheet roofing. I was surprised and so was my friend cum guide who is a local but resides in Kathmandu. How this miracle happened?

1. The Tamangs there (about 90%) have still community bond. When they decided, they managed the resources and work force.

2. Mostly, they used the zinc sheets of the collapsed/cracked houses and also some families bought new zinc sheets.

3. Many families (nearly 70%) have a member working in foreign countries - Malaysia and Golf countries. They send resources in times of great need.

4. They have a community managed forest and they got branches of trees to use as wooden support. They got it free of cost. However, they had to pay for small wages/snacks.

5. One community member replied me that now their shelters are ready, mostly they recovered their stored grains and they have received a few blankets, etc, hence, they are in better position to stand during the monsoon. They have big question mark that how they will construct their house in the winter. Their expectation from the government and also from NGOs is nearly NIL.

6. They have so much grief as they lost two members of their community during the very first earthquake.

Finally, I found that there is resilience, empathy, sympathy, community bond, minimum resource base, self-confidence generated by different factors including their loved ones working in Malaysia, Golf countries etc. Hope has returned in the form of the tiny shelter. When we see dark around, a small candle could bring the joy of light.

In the villages like Katoun, if the government could be sincere in providing 15,000 Rs as interim relief and 200,000 Rs as compensation for the uninhabitable/damaged houses and 25000 Rs for the houses that could be repaired, the people could stand firmly on their feet.

Every village and every family is different. So, it could not be simply generalized. However, we must understand that those who rebuild the villages and the lives of the people there, are the people themselves. The government and private institutions or individuals could support during emergencies and could assist in reconstruction and rehabilitation.

Narrow sub-nationalism and aggressive nationalism both harm us

Rajesh Sharma

I have seen a bitter debate going on for some days among and between some contributors on Facebook regarding taking some earthquake affected people to Tarai.

Narrow sum-nationalism and aggressive nationalism have come into full play. This is not a time for fighting within. Neither Nepal will break simply because a few leaders have made half-cooked statements nor it will be stronger only because their opponents are reacting vehemently. Now, emotions should be in check. Even, small events, minor unpalatable statements and a few unwanted things could be ignored. This is the situation of national calamity of unprecedented scale, intensity and nature and we have to direct our total energy to rebuilding lives as well as socio-economic and physical infrastructure.

As far as taking people to Tarai is in consideration, it is not the business of the Kathmandu elites. For resettling people (when it is absolutely necessary), it should be done in an area as close as possible to their native place. They should have access to their farmland if possible. It is not that easy to resettle. It is interwoven with their livelihood, skill compatibility, culture and climate acclimatization. Please do not see people as one rice mill, which could be dismantled here and could be reassembled some where else.

A Great Nepali Show Is Going on

Rajesh Sharma

The time of desperation and nervousness is over. Now, creative imagination, the dream of making something out of nothing, hope and confidence should govern our thoughts and deeds. Those who have lost their loved ones have shown extreme patience and have accepted the cruelty as reality. Those who have lost their shelter and livelihood are also gradually standing up and are trying to rebuild their lives. Those who have not lost that much are trying their level best to share with less fortunate compatriots. A great Nepali show is going on. This massive campaign of rebuilding through rehabilitation and reconstruction will unite us as strongly as possible, will generate compassion as deeply as possible and enable us to scale new height as high as possible.

Exceptions are everywhere. The millionaires and billionaires in Kathmandu are busy in garbing a 1000 Rupees tarpaulin sheet. The black marketers are selling goods at much higher prices than it should be. Thugs are collecting money and are enjoying several pegs of whiskey in the late evenings misusing that money. Many people who have not seen any damage to their house or rented rooms are enjoying lives in Tundikhel and several places like that. Many government officials are making their pockets heavy with the money intended to go to victims. And, many leaders and cadres of political parties are busy in all sorts of corrupt practices. However, this is not the general trend. The people will keep account of such things and, most probably will take direct actions where it happens. A few such actions are already seen.

As a collective, as a Nepali nation, we will overcome all difficulties and will start smiling sooner than later. Let's build hope and let's march forward. We are a great nation. Move is our character. CHARAIBETI, CHARAIBETI !

tarpaulin sheets and CA member's

Rajesh Sharma

Great decision by Urban Development Ministry regarding tent distribution to CA members. The queue to get two tents or tarpaulin sheets provided evidence that the CA member's mentality is that of accumulation - be that power, wealth, relief materials or anything else. May be, there are exceptions like Kamal Thapa and Bhim Rawal but the mentality like that of Rajendra Pandey is self-revealing. I salute the bad brain behind the decision and the bad behavior of many law makers as these two together have made amply clear the corrupt mentality of the creamy layer.

National Government??

Rajesh Sharma

There is debate now going on about formation of a national government. I believe, this will create distraction from relief delivery and devising an effective and meaningful rehabilitation and reconstruction plan. In any case, the same stale faces will come together in a new basket. And, also it may create further polarization among and between the crooks at the top. Hence, I think, formation of a high power rehabilitation and reconstruction authority is the need of the hour. Our whole concentration should be on channelizing our energy and resources so as to start creating hopes among ourselves. A few too corrupt, too feudal and too inefficient ministers could be replaced. Let's do first things first rather than reshuffling the stale hierarchic order.

Earthquake and Treasury of Lord Pashunath

Rajesh Sharma

Now, this is the right time to get help from Pashupatinath. During this time Pashupatinath's treasury could help to build several thousand houses or could provide two meals a day for several thousands people for several months. Let's use the wealth there for helping suffering humanities. The Lord Pashupatinath, if he exists (sorry, I am not a pro-God person) could be happy, the devotees should be happy and the victims of earthquake could get great help from this resource.

Share market: Immediate course

Rajesh Sharma

My comment on Santosh Singh Lingden ji's post about market in immediate future.

Now, damage is history and reconstruction is future. We have to see things in a dynamic realm - moving constantly. Hence, I believe that for some time, may be one or two months, damage factor or the history will dominate and market may go down but not that much. My assumption is that when the effect of reconstruction starts playing dominant role, the market psychology will improve greatly and the market will start moving up. Generally, I am expecting that during the coming dividend season in August-September, the index will be above 950.

Earthquake relief delivery: Biplav and C. K. Raut

Rajesh Sharma

I have noted contributions from two groups that signals very positive strategically. From long term perspective, their present endeavors may signal something good coming out from them.

Biplav and his party comrades are seen busy sharing labor in constructing temporary shelters in quite some villages. This was the need of the day and they did exactly that.

Also, C. K. Raut and his colleagues/cadres are quite active in collecting relief materials in several districts in Madhes/Tarai and sending those materials in earthquake affected areas. Moreover, he has asked his cadres and people there to observe fast on May 29 and contribute that saved food grain to people in great need of support. This too is very positive development.

I appreciate these endeavors.

Earthquake rehabilitation and reconstruction commission/authority

Rajesh Sharma

Now, we have seen commitments from international community as well as Nepali business community for rehabilitation and reconstruction program. The problem is that they do not trust the government as it is seen as too corrupt. On the other side, the government suspects that if allowed to work directly, a large sum will be spent on administration of the fund and people will get just a few pennies. Both, perhaps are right in their respective perspectives.

Now, it could be a better arrangement if a trustworthy high level mechanism is put in place. This mechanism may be called a commission or authority but should have final authority in all areas of rehabilitation and reconstruction program. The commission/authority could be established by amending interim constitution or by adopting a law from the parliament. It will get funds and utilize those funds from international community, Nepalese government and local contributors.

The commission/authority should have renowned welfare/development professionals, education as well as health professionals, social scientists, economists, engineers, management expert etc. This commission should have about 15 members. In my imagination, persons like Kul Chandra Gautam, Dr. Govinda K. C., Kedar Bhakta Mathema, Anuradha Koirala, Arun Kumar Singh (Swami Ananda Arun) etc could best suit for such commission/authority.

Probable scenario of post earthquake share market

Rajesh Sharma

I read posts from friends including that of Puru R. Chimouriya ji and Sanj Maharjan ji about immediate effects or long term impact of the earthquake on the market. Broadly, I agree with them.

I believe that for a few days or a few weeks, the market will see RED but not that much down. A few people may need cash to meet emergencies and will sell. But, many will hold. Hence, within a month or two, the share market will stabilize or even move up if NRN investment starts pouring in and NRB reschedules loan repayment taken as margin lending.

Sector-wise, no major impact would be there even in case of insurance sector. However, we are less educated to understand that the money to settle the claims comes, primarily from reinsurance companies and Insurance fund. Due to our investors' level of understanding and education, insurance sector may see some significant fall initially. Micro-finance also will have the similar fate. Even commercial banks and hydro-power companies also may see some fall initially. This will happen due to more psychological than real factors and will be corrected soon.

The rumor mongers and sadists are plenty in number in the market. Unethical business practices are regular phenomenon than exceptions. Hence, we should be better prepared to see such situation but we should hold tightly our share certificates - physical or materialized.

Thank you the Rescue and Recovery Teams

Rajesh Sharma

During the time of crisis, some unexpected/unwanted things may happen unintentionally. Hence, it is natural that there could be some grey areas and so, benefit of doubt comes into play. The role Indian military personnel played is certainly praiseworthy baring a few exceptions. We should take the exceptions as gray areas that invite benefit of doubt. Therefore, with all humility, we should say, "Thank you Indian Army for your contributions during rescue and recovery phase!"

Similarly, Our sincere thanks to all rescue teams who had valuable contributions in saving precious lives. Neither we will forget the devastating earthquake nor we will forget your daring acts. Our heartfelt "Thank You, all of you."

Finally, our very own army, armed police and civilian police did a job beyond our expectations. Their courage, skills and motivation made us a proud nation. We salute you all!

Earthquake and our responsibility

Rajesh Sharma

This natural calamity has devastating effects on our lives. We saw what is nearly impossible to accept. We lost so many friends, relatives and fellow compatriots. We are certainly passing through a stage of national mourning. But, for us, who are still okay, this is time for perseverance, call of duty and sharing. Let's contribute our time, energy and resources as much as we can and help our compatriots and our beloved nation to come out of the darkness as we have been seeing. I believe that as organized teams or as an individual, we have immense potentials to serve the suffering humanity and a hurt nation.

Earthquake and failed political leadership

Rajesh Sharma

The political leadership has failed badly. Now, it is high time to hand over all responsibilities to coordinate, handle, manage and provide relief program, acts, activities and actions to the national army.

We and Earthquake

Rajesh Sharma

Every new situation brings new challenges and new opportunities. The devastating Gorkha Earthquake 2015 also has brought major challenges and opportunities.
1. We have, now, some major challenges that include providing relief and temporary accommodation to a few millions of people. Hence, we need food, water, clothes, medicines and tents as well as materials to construct temporary shelters. This is our immediate challenge.
2. Counseling, consoling and providing emotional support is another area of immediate challenge. The trauma of loosing someone near and dear, being hurt and fearful need care and psychological comfort.
3. Bringing normalcy back including running regular support services, institutions, offices, factories and businesses as soon as possible is another challenge.
4. Agriculture should get special priority and maximum support as that is the life line of our rural economy.
5. Rebuilding infrastructure - private, corporate, collective and public is our strategically important challenge. In this process, we should reconstruct our infrastructures taking into consideration our seismic vulnerability.
6. We are a bit in position of strength as our airports, road networks; telecom infrastructure and hydro power projects are generally okay and are functional. The focus now is on rebuilding buildings and repair of vital infrastructures if there are any damages.
7. Our damaged buildings are mostly in rural areas and private buildings. There is still community culture exists and rebuilding could generate some community process and would be done with less corruption and corrupt practices. If resources in the form of cash as mix of grant and loan is provided and programs like food for work in massive scale, that would address both food and resource needs.
8. The massive reconstruction activities would generate millions of jobs in construction, development, socio-economic and psychological rehabilitation and the purchasing power of the working class people may go up.
9. The massive inflow of government, donors' and private resources would create momentum in our economy that will take the nation from emergency to uplitment in a shortest possible time.
10. Now, the government must allocate all surplus budget of this financial year in the "Earthquake Reconstruction Fund" and also allocate significant part of next five year budget. Bilateral as well as multilateral resources also should be mobilized in billions of dollars by packaging new products and services and marketing them, rather than just crying for funds.
11. Controlling corruption ruthlessly by people and state is need of the hour. Taking direct action by people at the field itself against corrupt persons including politicians, bureaucrats and so-called local leaders/NGOwalas could also come into action.
WE COULD AND SHOULD BUILD OUR NATION. Let's unite and channel our energy, time and resources to rebuild our villages, towns and cities.

Bank loan, medical college affiliation and share market

Rajesh Sharma

"Medical Collegele Sambandhan napaye Bank Dubne", some of the headlines read like this. Is it so?

Yes, banks have financed in medical college projects and their financing is primarily on physical infrastructures. The promoters also have invested equity part in such infrastructure projects. They are healthy potatoes and could be sold in the market at reasonable price. Hence, I do not buy 'bank dubne' conclusion. For some, if they have invested in non-infrastructure projects like paying allowances to Khadebabas, yes they may suffer losses. However, such financing is nominal. The banks may have to go for larger provisioning and their balance sheet may look weak, but 'dubne' is not a case at all. For short term investors, it may invite some trouble, but for long term investors, that may impact nominally if at all.

Biggest roadblock in Nepali Share Market

Rajesh Sharma

The biggest roadblock in Nepali share market is unstable political situation caused by the rivalry between K. P. Oli and Pushpa K. Dahal. All other politicians are just the part of details.

Nepali market - Some syndicates and some trading houses

Rajesh Sharma

In developed markets, factors like big or small players, syndicates and trading houses etc, may be considered as peripherals as demand and supply rule the market. But, in underdeveloped markets like ours; rumors, manipulations,   covert operations like wrongly using BT platform, overt interventions like willfully introduced ambiguous policies by the regulators, etc play vital roles. 

Hence, I thought to share what impression I have about BIG Players in the market.

There are three major syndicates and three major trading houses operating in the share market in Nepal now.

Syndicate 1 - NRB officials/finance ministry officials including former officials of both. They issue directives targeting the market. Often, the directives have mouths in both sides. There is enough room for misinterpretation. Present 5% provisioning directive is one such thing. They use this modus operandi to get richer in no times by buying and selling shares in the name of many relatives/friends.

Syndicate 2 - Officials of SEBON/NEPSE/CDS. They simply obstruct the process of bringing transparency in the market. They may or may not be directly involved in buying or selling shares, but they get wealth accumulated through this modus operandi of obstruction/acceleration. Delay in implementation of CDS is an example.

Syndicate 3 - A few brokers have been accumulating wealth through a well thought out strategy. Primarily, they do this by utilizing the system of BT for their vested interest.

Trading House 1 - Pradhan, Shrestha and another Pradhan are in this trading house. Manufacturing rumors, packaging them well and marketing rumors as truth are their way of doing things. The group attacks a company as SALAHA, partly controls it, does cosmetic surgery and sells at unbelievable price.

Trading House 2 - T'wala trading house has a bit ethical strategy. It tries to influence the management and harvests benefits in a comparatively business like manner. However, this trading house also utilizes rumors spread by other trading houses. The worst thing this trading house does is that it influences Syndicate 1 and 2 and shares benefits with them by reaping bumper harvest through introduction of ambiguous policies.

Trading House 3 - This Shrestha, Shrestha and Shrestha trading house is naked, openly corrupt and does anything at its disposal to grab, snatch and rob money. This infamous trading house needs no further explaining.

Moreover, the political crooks provide fodder to above mentioned syndicates and trading houses. And, the syndicates and trading houses chew that fodder tastefully. Hence, this factor also needs to align with rumor mill when looking at, analyzing and understanding the market

Hence, we small investors need to develop information network, should expand knowledge base and  have to insert courage within ourselves so as to smell, analyze and understand what is happening in the market and strategize our behavior accordingly.

I believe we should develop capacities to survive and flourish in an environment, which is hostile. That is absolutely possible.

Market going down again

Rajesh Sharma

The market has gone down by 11 and half points today. The down turn is continuing. The volume is also not so impressive. Why so and what we could do?

Investor psychology is governed by fear. The reasons could be many. Among them, I have listed below a few:

1. Fear due to Nakkali Share certificate factor. Particularly, it has influenced in decrease of demand.

2. Selling pressure due to desire to clear shares in BT. IT has increased the supply.

3. Political pendulum moving fast in either direction heralding longer time for fluid situation. The agitation factor creating some type of nervousness.

4. Some brokers are out of business for quite sometime and their clients are in wait and see situation creating defensive environment.

Moreover, also there is, in general, a seasonal effect as this is a dull period historically. The dividend season is over and declaration time is quite far away.

Who is on fire? Certainly the small traders. Those who could not hold or do not dare to increase either money or number of shares will suffer most. Every major down turn throws a few traders out of business. This is too bad but a reality.

For long term investors, there is always another day, another time. They could bear the loss in paper and could wait. This is neither financial crisis at macro level nor a company's collapse at micro level. Economy is performing okay and a large majority of the companies are performing well. Hence, the turn around is certain.

There are three probable options.

1. Hold if you are investors and turn to be investors, if you are traders and again hold.

2. We never know what happens next. Simply we could do probability assessment and take decisions accordingly. If we really believe that turn around is certain, to earn more, movement is necessary. Therefore, we could invest today or even sell part of our shares right now and keep cash ready to buy more number of shares some days down the line anticipating that for some time bear would rule the market. Holders are relatively safe but are not better than risk taking/entrepreneurial investors or skilled/ courageous traders.

3. Continue to be fearful, be restless, carried away by rumors and pray for peace of mind as well as for safety of your investment.

The third option is not at all for people, who are in business that takes place in share market.

We should devise strategies and develop skills necessary to earn in both types of market situations - bull and bear. How that could be done is altogether different to different individuals and, thus, their performance is different. Now, social Darwinism is in full play. Only fittest could survive and even flourish. We are in a hostile terrain, let's acknowledge this fact and proceed ahead.

If we really believe that we lack that extra courage, temperament, skill and attitude, let's use the reverse gear, leave the share market and do something suitable to our attitude, skill and temperament. Peace of mind and harmony between our temperament and area of actions are more important than being in certain occupational stereotypes. This advice is not for our friends, who are silent/passive small investors for years, who applied in IPO, got some shares and are keeping that in their boxes. This advice is for active investors/traders.

We could not control or even influence the political course. Hence, we have to operate in an given political environment.

The surprising factor here is the role and actions of the regulators of the share market. They are doing nothing in implementing CDS, which could rectify many wrongdoings in the market. Here, the investor community in general, and the Investors Forums in particular, could play a role. Therefore, through this note, I request friends in the Investors Forums to take lead role in clearing the mess from the market by pressurizing the regulating authorities to implement CDS.

Like · 

• Madhav Pathak, Utsab Shrestha, Aarjan Baskota and 19 others like this.
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  Prashim Shakya Effect of IPO as well

  March 16 at 4:45pm · Unlike · 2
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  Rajendra Bhattarai how long does this bear trend go? any idea

  March 16 at 5:02pm · Like
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  Prashim Shakya Depends upon mentality of investors

  March 16 at 5:04pm · Like
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  Rajendra Bhattarai i think bholi second hour ma jharna rokincha hola

  March 16 at 5:07pm · Like
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  Rajesh Sharma There is no bear phase in our market as such. This is simply a correction. Invetopedia defines bear market as, "A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustai...See More

  

  Bear Market Definition | Investopedia

  A market condition in which the prices of securities are falling, and widespread pessimism causes the...

  INVESTOPEDIA.COM|BY ROOT

  March 16 at 5:13pm · Like · 1 · Remove Preview
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  Rajesh Sharma As long as Rajendra ji's question regarding how long the market will be in correction mode, I think here are three factors - 1. criminal acts in the market such as Nakkali share certificates and its impact seen in fear, 2. volatile political environmen...See More

  March 16 at 5:20pm · Like · 1
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  Santosh Raj Bajgain Bear trend comes when the companies starts to decrease their profit,interest rates starts to increase(person finds more returns in bank than stock),there are more oppurtunites or investing feild,national economy starts to plump,communist favoured government...from any angles i cant feel a bear trend.(personal analysis)

  March 16 at 7:14pm · Like · 1
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  Rajendra Pradhanang I agree bearish trend is an overall effect of the economy as a whole. The increase in bank interest rates mean people start to deposit their savings in a bank rather than in stocks..Bank will face lack of liquidity..

  March 16 at 7:21pm · Like
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  Suraj Lal Amatya i think it's a starting phase of bearish trend; there is slightly increase in interest and economy is also not good as we predicted...sentiments are not favourable