Charm Over IPO In Nepal – Reason Behind
DWAIPAYAN REGMI
It has been seen that number of Demat Accounts is rising at a rapid speed. Before lockdown, there was not that huge crowd for Demat Account, CRN number applicants in the bank – but right after lock down, today banks are seen crowded not for a cash deposit, withdrawal, or loan files – but share issues.
The trend shows how IPO applicants are in increasing order. At this time when there are 19,81,598 Demat accounts, the total number of applicants who applied for IPO of General Insurance was 813632, which makes 41% of the total Demat account holders.
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It can be seen that IPO is gaining hype these days, and a lot more hype than that of previous days. Increasing applicants are certainly a good sign for the capital market in the long run. Gone are the days, when one should take a leave from office simply to stand in the queue for applying the primary share.
The following are the basic reasons why IPO hype has been observed in these recent days.
Easy Access
Today, one should not stand in a long queue wasting all day simply to apply for primary share. Nor should one visit the nearby big cities for applying shares, or ask someone residing in cities like Kathmandu, Biratnagar, Birgunj, Pokhara to apply share on their behalf. They can simply do it online, and at the time of their ease. This is the primary reason why IPO applicants are rising. Meanwhile, with a TMS account – you should not rush to cities where brokers reside to sell the shares either. Someone residing in Sankhuwasaba can buy and sell their shares without even visiting the Broker’s office. Banks at local levels have been providing every service like Demat Account opening, CRN number from there itself creating an easy environment for new investors.
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Complex Alternatives
Bank offers minimal interest rates these days. It is unwise to even discuss the basic savings account at this time, that have been offering even a 1.5% interest rate. The real estate business is not like before which can be seen from minimum classified advertisements in daily newspapers. So, where should people keep their money – it can be a small amount, but investing in shares has turned out to be the new trend. When a large number of small investors apply for a small quantity – the amount is certain to appear higher one. And, that all ends up in a high number of IPO applicants.
Financial Literacy
Increased applicants are a clear sign of improved financial literacy. Unlike earlier, today’s IPO is being applied by a doctor residing in Kathmandu, to a farmer living in the village of Taplejung. There might be a question if they are aware of the company, but this could be seen in another way – they will gradually get aware of the capital market with experience too. People, who were confused and suspicious about the share market are gradually found to be interested in it and are taking their step in learning through the experience itself.
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Booming Secondary Market
NEPSE has clearly stated that there is a large number of new investors that are entering into the secondary market at this time. An increased number of turnover amounts is regarded to be because of the same reason. Today, there are very few shares that are priced below Rs 100 – indicating that primary share is gradually turning out to be a safe game. The secondary market, which fell to 1100, is now about to kiss the index of 1600 – showing hope for the future again.
Duplications
It is no surprise that a large number of Demat Account holders even know that they have a Demat account. They don’t have any clue that they are the owner of shares of various companies. The truth behind that lies is someone else would be applying on their behalf. Generally, family members, them-self are careful and cautious about applying shares in this regard. Some individuals apply shares of up to 50 applicants all alone – in the name of family members, friends, neighbors, or relatives. This counts as an exclusive reason why applicants are in rising form another point of view as well.
Sanima General Insurance’s IPO is the next IPO opening. The same charm will certainly be seen there too. It is positive hope that a large number of public participating in IPO will lead to an optimistic capital market of the nation anyway.
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[Mr. Dwaipayan Regmi is currently working as the Assistant Manager in Rastriya Banijya Bank]
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