Have you left your eyes on the insurance company’s shares, microfinance as an investor’s choice?

Kathmandu : Recently, the attraction of investors in insurance companies is increasing. According to the data published by Central Bank, the shares of life insurance and non-life insurance companies are the first choice of investors. During the seven months of the current financial year, shares of the insurance company have been traded worth 60 billion 844 million rupees. During this period, shares worth 36 billion 754.2 million rupees worth 6 lakh 78 thousand 56 shares of the life insurance company were traded. Which is 193.48 percent more business than last financial year. During the same period of the last financial year, the turnover of the life insurance company was 12 billion 523.5 million rupees.

Similarly, the statistics of the National Bank have shown that the business of non-life insurance companies has also increased significantly. By the end of January, shares worth 24.93 billion rupees worth 356.620 thousand shares of Nonlife Insurance Company were traded. It seems that during the same period of the last financial year, Nonlife Insurance Company had a turnover of 114 million 75 thousand rupees.

Share analyst and investor Chhotelal Rauniyar said that due to the increase in the scope of insurance and competition for business growth, investor attraction has increased. He said that investors saw the future of insurance as golden. The market has been falling for many days in the last seven months. When the market falls, there is an attraction in a certain area. Insurance earnings are also good. In recent times, insurance is becoming mandatory for everything.

Because of this, the income of the insurance company is also increasing,” Rauniyar said. Rauniyar said that after the merger, as the insurance company became stronger, investors became more attracted. He said, “After the merger, some insurance companies have decreased. Income is increasing as the range increases. Seeing the golden future of insurance, the attraction of investors is increasing. The arrival of now established Himalaya Reinsurance is also the main center of attraction for investors. Reinsurance is expected to attract foreign investment. The insurance company’s capital increase plan has added a new dimension to additional insurance.

Investor Dipendra Agarwal said that the secondary market is attractive because the insurance company is getting stronger and the ability to pay dividends is increasing. The business of the insurance company is rapidly increasing. Insurance companies are also strengthening their ability to pay dividends to shareholders. That’s why investors are attracted to the share price of insurance companies in the secondary market,” Agarwal said.In the seven months of the current financial year, shares worth 3.5 billion rupees have been traded in the Nepal Stock Exchange (NEPSE). According to the Central Bank, during this period, 1 billion 885 million 96 thousand shares worth 3 trillion 54 billion 998 million rupees were traded in NEPSE. 13 groups in NEPSE, bonds of banks, founder shares and preferential shares have been selling in amount.According to the National Bank, most of the shares of hydropower companies have been bought and sold among 13 groups. 91 hydropowers are listed in NEPSE. During this period, 377 million 74 lakh 78 thousand shares of Hydropower Company have been traded worth 1 trillion 2 billion 10 million rupees. In the same period of the last financial year, shares worth 817.6 million 46 thousand rupees worth 261.369 thousand shares of Hydropower were bought and sold.

Rauniyar argues that short-term investors are now flocking to Hydropower’s shares. Now, long-term investors are investing in banks and financial institutions. But investors who book for quick profit seem to be obsessed with hydropower. For the same reason, investors seem to be attracted to hydropower,” he said.Investor Agarwal said that even though the turnover of Hydropower has increased, there is no indication that the share price will rise. He said, ‘Hydropower business has increased. But the share price of Hydropower does not seem to go up immediately. Rather than hydropower, it is better to invest in the banking and finance sector.Hotels and tourism are among the groups with the highest increase in share turnover. After Corona, the economy is slowly returning to the rhythm. The number of tourism is also increasing every month.

Due to the same reason, during the 7 months of the last financial year, the share turnover of hotel and tourism group has increased by 394.10 percent in the 7 months of this year.The hotel and tourism group, which had a turnover of 2.86 billion 24 lakh rupees by the end of January of the last financial year, has bought and sold shares worth 14.14 billion 28 lakh rupees during the same period of the current financial year.

Why is microfinance stock trading not attractive?

It is seen that the attraction of investors in microfinance is decreasing. Microfinance companies have been in crisis for the past few months. Due to the street protests against the cancellation of the company, bad loans of microfinance are increasing. On the other hand, due to the limitation imposed by Nepal Central Bank on dividend distribution, the attractiveness of microfinance in the secondary market is decreasing.

In the seven months of the current financial year, the turnover of microfinance is 17 billion 398 million rupees. Which is 46.43 percent less than last financial year. In the same period of the last financial year, the turnover of microfinance group was 32 billion 47 crore 37 million rupees.Similarly, the share turnover of the finance company decreased by 36.43 percent to 12.92 billion 30 million rupees.

The share turnover of Development Bank has also decreased. During this period, Development Bank’s share turnover decreased by 7.07 percent to 18.81 billion 1.3 million rupees.Investors have already lost 60.70 percent investment in banks and microfinance. The share price of the banking sector has reached the lowest price.

The movement in the market also seems to have reduced the share price of the microfinance and banking sectors. Investor Rauniyar said, but it seems to be an area of ​​attraction for investors. It will take time. There is no place to decrease now. Banking sector is a big sector of Nepal. The atmosphere gradually builds. The investment made in this area is not wasted.

Investor Agarwal said that the share price of the company has fallen due to the policy of the National Bank. The income per share of the microfinance sector is continuously declining. The central bank also obstructed the distribution of dividends. Due to policy obstacles, the business in the secondary market of microfinance is declining.