Some
friends have asked me, which company is better to apply in IPO - Barun
hydro or Januthan Laghubitta. I send some replies throw messages, but
the number now is considerable. Hence, I thought to post my opinion
here.
Micro-Finance Companies (MFIs) are like instant noodles. They provide taste and energy instantly. Hence, the investors if they get any share could start enjoying lives immediately. The profit is there. However, they are small and vulnerable. Also, they are subsidized through low interest rate funding. If the central bank makes change in policy, the effect could be higher on MFIs. But, for now they are the best bet. Therefore, they could be most preferred companies for trading.
Hydro-power companies, particularly the project specific companies operate with some limitations - local pressure, not so clear regulatory framework and product diversification, no clarity about ordinary shareholder's ownership after handover to government. For, big conglomerates, they could diversify products and could survive for long. Still, regulatory as well as policy framework are the weak links. The larger projects like Upper Tamakoshi may become mini Melamchi and may get delayed by several years. Hence, barring the effects of concerted rumor, there is less chance that hydro-power project could give instant profit. Therefore, these companies better suit to long term investors, who do not wish windfall gain the next day. However, in Nepali market, which is in infancy stage rumor, sky-high expectations, herd mentality and many other uncritical and no real factors rule the market.
My final advice is that Nepali market generally does not follow the rules of the game. Politics plays more effective role here than performance of the economy and rumors influence more than companies' performance. Hence, we should park our money at our own risk.
Micro-Finance Companies (MFIs) are like instant noodles. They provide taste and energy instantly. Hence, the investors if they get any share could start enjoying lives immediately. The profit is there. However, they are small and vulnerable. Also, they are subsidized through low interest rate funding. If the central bank makes change in policy, the effect could be higher on MFIs. But, for now they are the best bet. Therefore, they could be most preferred companies for trading.
Hydro-power companies, particularly the project specific companies operate with some limitations - local pressure, not so clear regulatory framework and product diversification, no clarity about ordinary shareholder's ownership after handover to government. For, big conglomerates, they could diversify products and could survive for long. Still, regulatory as well as policy framework are the weak links. The larger projects like Upper Tamakoshi may become mini Melamchi and may get delayed by several years. Hence, barring the effects of concerted rumor, there is less chance that hydro-power project could give instant profit. Therefore, these companies better suit to long term investors, who do not wish windfall gain the next day. However, in Nepali market, which is in infancy stage rumor, sky-high expectations, herd mentality and many other uncritical and no real factors rule the market.
My final advice is that Nepali market generally does not follow the rules of the game. Politics plays more effective role here than performance of the economy and rumors influence more than companies' performance. Hence, we should park our money at our own risk.
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