VOLUME 2, ISSUE 6 FEBRUARY 10, 2023

IDEAPRENEUR
NEWSLETTER

"Making Nepal Financially Literate"

 What’s Inside?

01 NATIONAL AND INTERNATIONAL NEWS

Page 3-6

MACRO ECONOMIC OUTLOOK

Page 7-11
02
03 NEPSE THIS WEEK
Page 12-14

NEPSE'S FUNDAMENTAL
Page 15-17
04
05 TECHNICAL ANALYSIS
Page 18-19

ECONOMY INSIGHTS
Page 20
06
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 National and International News
Major National News
Nepal Rastra Bank issued a circular to BFI's not to accept fixed deposits from
institutional depositors for a period of less than six months. Institutions were
allowed to deposit money in fixed deposits for three months before.

According to SEBON chairman, Ramesh Hamal, SEBON will launch a SME platform
soon. It will provide a separate platform for transactions of small and medium
companies. SEBON is hopeful about beginning of golden era in stock market after
the introduction of said platform.

Nepal Bankers Association has decided to keep the deposit interest rate
unchanged in Falgun. The current interest rate for individual fixed deposits is 11 %,
while the rate for institutional fixed deposits is 9 %. According to the Central Bank,
the minimum interest rate for savings accounts is 6% and the minimum interest
rate for remittance deposits is 1%.

The Nepal Rastra Bank through issuance of unified directives, has instructed banks
and financial institutions not to publish photos of natural persons in the notice to
be made public for mortgage auctions.

Nepal Oil Corporation (NOC) has increased the selling price of petrol and diesel
by Rs 3 per litre. Now, The price per litre of petrol and diesel will be R.s 178 and R.s
175 respectively.The corporation has kept the price of aviation fuel unchanged.

During the first half of current fiscal year, Inflows of remittances have increased
significantly by 24.3 % compared to the same period last year to reach 585 billion
rupees. In US dollar terms, it is a increase of 13.9% compared to the same period of
last year to reach $ 4.5 billion.

According to the Finance Controller General's Office (FCGO), government's

expenditure has been only about 36.59 % during the period of about 7 months in
current fiscal year. The government had made a total budgeted estimation of
expenditure amounting R.s 1.793 trillion in current year but expenditure up to Magh
26 (thursday) amounts only 656 billion .

Nepal Stock Exchange (NEPSE) has demanded various details of listed companies
for classification of the listed companies. On its website, NEPSE has also provided
a format form to submit such details.

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 National and International News

Nepal Rastra Bank has relaxed branch opening provisions for BFI's in relation to
Non performing loan (NPL). Now, BFI's with above 5% NPL are allowed to open
branch offices, which was restricted earlier.

Nepal Rastra Bank has taken enforcement action against commercial banks of
Nepal. The Bank penalized Prabhu Bank limited, Kumari Bank Limited, Global IME
bank Limited (earlier, Bank of Kathmandu) and Prime commercial bank limited
with R.s 50 lakhs each for contravening provisions related with Money laundering.
The bank also warns CEO and other banks for other mala practices.

Nepal Rastra Bank (NRB) has taken over control of the problematic microfinance,
Super Laghubitta Bittiya Sanstha Ltd. Now, Microfinance institution supervision
department of NRB will look over the management of the entity..

Deputy Prime Minister and Minister of Energy, Water Resources and Irrigation
Rajendra Prasad Lingden has said that the issue of purchase rate of solar
electricity decided by Nepal Electricity Authority will be revised. Earlier, NEA used
to purchase solar energy at R.s 5.94 per unit.

The United States Agency for International Development (USAID) has announced
grant of nearly $ 60 million to Nepal to promote democratic progress. The funds
will be used to strengthen inclusive democracy in Nepal by supporting civil society
and the media, as well as strengthening local elections, the rule of law, and the
fight against human trafficking.

Nepal Rastra Bank (NRB)

issued the first monetary
policy after 46 years of
it's establishment.
Nepal Rastra Bank (NRB) is the central bank of Nepal and it was established in 1956
under the Nepal Rastra Bank Act, 1955. It is responsible for formulating and
implementing monetary policy in the country and maintaining the stability of the
financial system. The first monetary policy was issued in 2002/03 by NRB under the
governorship of Dr. Tilak Bahadur Rawal, 46 years after its establishment.

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 National and International News

Major International News

The Reserve Bank of Australia (RBA) raised its cash rate target by another 0.25
basis points taking it to 3.35%. This is the ninth consecutive rate hike in a row over
ten months totaling 325 basis points and exceeds the 2002-2008 tightening cycle
of 300 basis points over 71 months making it the biggest tightening cycle since the
1980s. According to RBA It will be some time though before inflation is back to
target rates. In Australia, CPI inflation over the year to the December quarter was
7.8%, the highest since 1990.

The Reserve Bank of India (RBI) hiked its key repo rate by 25 basis points to 6.5%
from 6.25% after the assessment of growth and inflation requirement. The RBI has
raised the repo rate six times since May 2022, bringing the total hike to 250 basis
points. Consequently, the standing deposit facility (SDF) rate will stand revised to
6.25% and the marginal standing facility (MSF) rate and the Bank Rate to 6.75%.

Trade between the United States (US) and China hit a record high in 2022. The
bilateral goods trade between the countries rose to $690.6 billion in 2022,
exceeding the record of $658.8 billion set in 2018. According to the US Bureau of
Economic Analysis exports to China increased $2.4 billion to $153.8 billion and
imports from China increased $31.8 billion to $536.8 billion in 2022.

The economy of Pakistan is in deep trouble. Since its foreign reserves are so low,
it can hardly import enough goods for livelihood. According to the State Bank of
Pakistan (SBP) total liquid foreign reserves held by the country stood at USD 8.54
billion as of February 03, 2023. Consumer Price Index (CPI) inflation in January
2023 increased to 27.55% from 24.47% month earlier and the currency rate has
dropped to a record low against USD.

According to National Bureau of Statistics of China the consumer price index

(CPI) rose by 2.1% in January from a year earlier, up from 1.8% growth in
December, marking the fastest pace in three months. Prices are seen to have
picked up alongside resumed consumer activity with China’s reopening after
more than two years of Covid-zero policy.

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 National and International News

Ongoing Issue

Total Amount
Total number
S.N. Company of Issue Closing Date
of issued units
(In NPR)

1 Asian Hydropower Limited 69,720,000 697,200 2023-2-14

Upcoming Issue

Total Amount
Total number
S.N. Company of Issue Opening Date
of issued units
(In NPR)

Molung Hydropower
1 226,465,500 2,264,655 2023-02-16
Company Limited

IPO approved during the week

Total Amount Date of

Total number
S.N. Company of Issue Approval of
of issued units
(In NPR) SEBON

Menchhiyam Hydro Power

1 162,775,000 1,627,750 2023-02-03
Ltd

Dividend Announcements
Bonus Cash Total
S.N. Symbol Company
Dividend Dividend Dividend

Asha Laghubitta Bittiya Sanstha

1 ALBSL 20% 1.0526% 21.0526%
Limited

Vijaya Laghubitta Bittiya Sanstha

2 VLBS 20% 1.0526% 21.0526%
Limited

Samata Gharelu Laghubitta Bittiya

3 SMATA 15% 3% 18%
Sanstha Limited

Shangrila Development Bank

4 SADBL 8.534% 0.449% 8.983%
Limited

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 Macro Economic Outlook
Macro Economic Outlook
Inflation
Inflation is the rate of increase in general price level of goods and services over a period
of time. Inflation is main reason of depreciation in value of money over a period of time.

2022/23 2022/23
Particulars Change % Change
Mid- January Mid- December

CPI based Inflation 7.26% 7.38% (0..12%) (0..12%)

Remittance 585.07 Arba 480.5 Arba 104.57 Arba 21.76%

Forex Reserve $10.3 billion $9.82 Billion $ 0.48 Billion 4.89%

CD Ratio
CD ratio is a measure to calculate ease of lending position to bank and financial
institutions (BFIs) and also shows liquidity position in financial market of the country.
Nepal Rastra bank has prescribed BFIs to maintain CD ratio within 90%.

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 Macro Economic Outlook

Inter Bank Rate

Inter Bank Rate is the interest rate imposed by BFIs on short-term loans made
between BFIs to guarantee that they have sufficient liquidity to meet their demands
and regulatory requirements. Interbank rate is a crucial factor of a country's liquidity
condition.

When the Interbank rate declines, it indicates that BFIs have ample liquidity and may
not require a loan to maintain regulatory ratios, and vice versa.

Short Term Interest Rate

Weighted Average Treasury Bill Rate

(Published on 7 Feb, 2023)

Days Rate

28 days 5.90%

91 days 9.63%

182 days 10.24%

364 days 10.09%

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 Macro Economic Outlook

Weighted average deposit and lending rate

Weighted average deposit rate is the aggregate of interest paid to depositors on

deposit by BFIs and Weighted average lending rate is the aggregate of interest
received from creditors on funds lend by BFIs.

Particulars 2022/23 2022/23

% Change
(of commercial bank) Mid- january Mid- December

Weighted Average Deposit

8.51% 8.46% 0.05%
rate

Weighted Average Lending

12.79% 12.74% 0.05%
Rate

Interest Rate Corridor

Interest Rate Corridor (IRC) is a monetary tool to manage short term volatility and
provide stability on interbank rate. NRB implements interest rate corridor through
repo and reverse repo. In case of tight liquidity position, where interbank rate are
expected to be above ceiling rate prescribed in interest rate corridor, NRB provides
liquidity in market using Repo and in case of excess liquidity, where interbank rate are
expected to be below floor rate prescribed in interest rate corridor, NRB withdraws
funds from market through Reverse Repo. Thus, NRB maintains volatility in interbank
rate through the application of Repo and Reverse Repo.

2022/23 2022/23
Interest Rate Corridor (IRC) % Change
Mid- January Mid- December

Ceiling Rate (SLF) 8.5% 8.5% 0.0%

Policy Rate (overnight repo) 7.00%% 7.00% 0.0%

Floor Rate (Deposit

5.5% 5.5% 0.0%
Collection)

NEPSE Market
GDP Market Cap
NEPSE Capitalization to GDP NEPSE Index Capitalization
(in Cr.) to GDP Ratio
(Rs. Cr)

2,182.63 3,14,965 4,85,162 64.92%

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 Macro Economic Outlook

Government Revenue
Particulars 2022/23 2022/23 Change % Change
Mid- December Mid-
November

Value Added Tax   131,445.01   155,597.01  (24,152.00) -15.52%

Customs     85,787.27   130,650.35  (44,863.08) -34.34%

Income Tax   116,790.42   122,230.72    (5,440.30) -4.45%

Excise     70,509.90     85,231.66  (14,721.75) -17.27%

Educational Service          736.73          283.15        453.58 160.19%

Tax

Non-Tax Revenue     53,717.52     48,061.52     5,656.01 11.77%

Total  Revenue   458,986.85   542,054.40  (83,067.55) -15.32%

Other Receipts     31,057.00    34,193.87    (3,136.87) -9.17%

Total   490,043.85   576,248.26  (86,204.42) -14.96%

Revenue/Receipts

Government Revenue and Expenditure

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 Macro Economic Outlook

Foreign Exchange Reserve

Foreign exchange reserves are assets held by central bank denominated foreign
currencies. They can be used in imports of commodity and services inside country. It
is considered better for an economy if foreign exchange reserve is held in large
amount to support import inside country.

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 NEPSE This week
NEPSE This week
This week, the NEPSE closed at 2,182.63 points, which is a increase of 4.21% compared
to the 2094.54 points it closed at last week. The total market capitalization was
NRs.314,965 crore, while the floated market capitalization was NRs. 111,911 crore as of
this week. The overall turnover for the week was NRs. 1252.22 crore.

Weekly NEPSE Indices

INDEX OPEN CLOSE CHANGE

FLOAT 147.5 153.54 4.09

NEPSE 2096.7 2182.64 4.1

SENFLOAT 133.95 140.16 4.64

SENSITIVE 398.37 415.42 4.28

Weekly NEPSE Turnover

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 NEPSE This week
Weekly NEPSE Sub-Indices

INDEX OPEN CLOSE CHANGE

Commercial Banks 1365.47 1405.96 2.97

Development Banks 3662.66 3893.1 6.29

Finance 1722.5 1845.94 7.17

Hotels and Tourism 3228.11 3321.13 2.88

Hydropower 2588.59 2738.67 5.8

Investment 64.34 69.47 7.97

Life Insurance 10716.76 11016.43 2.8

Manufacturing and Processing 5126.39 5399.72 5.33

Microfinance 4583.26 4720.83 3

Mutual Fund 14.44 14.62 1.25

Non-Life Insurance 9076.08 9443.93 4.05

Others 1494.08 1550.36 3.77

Trading 2235.57 2317.77 3.68

Weekly Top Turnover Stocks

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 NEPSE This week
Top Gainers

INDEX OPEN CLOSE CHANGE

JOSHI 265.2 316.9 19.49

ADLB 1967.4 2350 19.45

RADHI 255 292 14.51

JFL 386 434.9 12.67

BARUN 254 285 12.2

SMB 1177 1319 12.06

CORBL 303.4 340 12.06

NYADI 333 372 11.71

BHPL 561.6 627 11.65

GRDBL 262 290 10.69

Top Losers

INDEX OPEN CLOSE CHANGE

NBF3 7.79 7.54 -3.21

WNLB 1035 1011 -2.32

PCBL 220 215.9 -1.86

SPHL 492 483 -1.83

HEIP 294 290 -1.36

SAEF 10.99 10.85 -1.27

NLIC 751.70 744.90 -0.90

RBCLPO 11827.9 11751 -0.65

MLBBL 1122 1115 -0.62

SLBSL 1190.3 1190 -0.03

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 NEPSE's Fundamental
NEPSE's Fundamental

Nepal Stock Exchange (NEPSE) increased significantly this week, NEPSE gained 4.20%
(88.07 points) from its previous closing (2094.54) in five trading days. The stock
market is considered as a component of free-market economy because it provides
the public with investment opportunities and contributes to economic growth. The
fluctuations in stock market makes it more risky but, also offers better returns. The
fluctuations in stock market are caused by various macroeconomic factors within an
economy and fundamental factor within a company. The macroeconomic factors
include interest rate, money supply, inflation rate, among others while micro factors
include operating performance results, dividend decisions and future prospects of the
company.

During the week, the market gained by 1.54 points and 4.57 points in first two trading
days, followed by a significant increase of 76.69 points on Tuesday, following day
after NRB publishes positive macroeconomic data. The market declined by 7.13 points
on Wednesday and increases by 12.4 points on Thursday. The publication of
impressive macroeconomic data by NRB seems to be a leading factor towards
current market growth. The positive indicators like decreased trade deficit, increased
remittances, surplus balance of payment has increased confidence of investors
towards economy despite unfavorable global economic events. However, NRB fails to
address the expectation of investors in case of lifting margin lending cap of 12 crore.
Some of big investors in stock market are not found satisfied with the policy of NRB.

During 2022, trade between China and US hit a record high, despite travel restrictions
in China due to COVID-19. In first week of January, 2023, China lifted restrictions which
may contributes towards further growth in coming years. Further, US labor
department recently reported that unemployment rate of USA fell to 53 years low. In
addition, Inflation in Eurozone continued to decelerate in January due to easing of
energy prices. Thus, data from USA, Europe and China, which have more impact on
global economy provides large area to be optimistic on upcoming scenario. This
also supports for the growth of NEPSE index.

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 NEPSE's Fundamental
Government of India, through publication of budget for 2022-23 has reduced
business taxes, kept constant slab rate for persons and announced several facilities
to prioritize Farmers and startups. It is stated that India will recognize digital currency
trading from this year. It has set a goal to increase the size of Indian economy to 5
trillion dollars by FY 2026. The budget emphasizes on making Indian economy self-
reliant on electronics by levying higher custom duty on imported Chinese products.
The Government of India had announced an annual grant of about Rs. 12 billion to
Nepal for the fiscal year 2022/23. As Nepali currency is pegged with Indian currency,
economic growth, prices and exchange rates prevailing on Indian economy will have
a major impact on Nepalese economy. The positive economic events in India will
favor for similar situations in Nepal too.

Nepal Rastra Bank has published macroeconomic data for first six months of the
current fiscal year 2022-23. According to the data, consumer price inflation (CPI)
remained at 7.26% in Poush end, 2079 (5.65% in prior year). Total trade deficit
decreased 19.2% to R.s 711.86 billion (46.6% increased in prior period). The current
account remained at a deficit of R.s 29.47 billion (deficit of R.s 352.16 billion in prior
period). The capital transfer in the first half of current fiscal year decreased 19.1% to R.s
4.43 billion (5.48 billion in prior period) and net FDI remained at R.s 749.4 million (11.34
billion in prior period). The gross foreign exchange reserves increased by 10% from
Ashad end to R.s 1337.29 billion ($ 10.3 billion). The macroeconomic data shows that
our economy is recovering gradually.

The favorable external sector and positive balance of payment (surplus of 97.1
billion) can decrease prevailing interest rate. Further, Nepal Bankers Association
have also announced about their unwillingness to increase interest rate. The
interbank interest rate has been around 4%. Government have not been able to
collect estimated revenues due to imposed import restrictions which was
relaxed recently. So, Government shall need to raise funds through domestic
debt to carry out its budgeted activities. While, Banks were not in a position to
invest in government bonds at less than bank rate (earlier 8.5 %) which has
pressurized central banks to provide lending to BFIs at policy rate (7%). The
decrease in borrowing rate of BFI's from central bank is expected to decrease
interest rate in market. This can provide optimistic results in stock market.

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 NEPSE's Fundamental
Government have been able to collect only 36.36% of its budgeted revenue till the
date. The government collected 510.2 billion as revenue (budgeted 1403 billion) and
made expenditure of 656.3 billion (36.59% of budgeted 1793.8 billion) up to Magh 26,
2079. The government could make capital expenditure of only 17.13% of the budgeted.
The capital expenditure comprises of 9.92% of the total expenditure made by
government till the date. Though, we have scaring capital expenditure results, the
skewness of capital expenditure is always found more in second half of the fiscal
year. We may experience same in the current fiscal year too. We can expect more
capital expenditure and inflow of money from government treasury to banking sector
in coming days.

After analysis of all reactive macroeconomic factors, the recent fluctuation in market
seems as expected. We always recommend investors to thoroughly research and
analyze market conditions before making any investment decisions, in order to
minimize the risk of potential losses. We are always here to guide investors to achieve
their wealth maximization goals. Stay tuned !

Word Search Puzzle

Please see last page for answers Reserves Remittance

Consumer Expenditure
Policy Foreign

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 Technical Analysis of NEPSE
Technical Analysis of NEPSE

The market had been consolidating in a range since past 2 weeks and now, the
consolidation range was broken.

We were waiting the discount arrays below the equilibrium but market reacted at a
different reference point.

The midpoint of weekly Breaker demand block supported the price and we see a
momentum upwards which is confirmed in lower time frame.

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 Technical Analysis of NEPSE

The marked buy side liquidity point will be our first reference point for our targets of
NEPSE.

This concludes the technical analysis of the second week for Feb, 2023

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 Economy Insights

Why do central banks periodically review monetary

policy?

In recent days, many central banks throughout the globe have taken steps to modify
their monetary measures in order to address inflationary pressures. The Fed reviews
monetary policy through the Federal Open Market Committee (FOMC), which meets
eight times a year to determine changes to the nation's monetary policies. Similarly,
Nepal Rastra Bank (NRB) has started a half-yearly review of the policy since 2003/04,
and a quarterly review since 2016/17 to update its policy measures based on the
current economic and financial situation.

Would frequent monetary policy reviews improve the nation's economy? Let’s discuss
why do central banks review monetary policy so often.

Central banks review monetary policy on a regular basis to ensure that the economy
is functioning effectively and to adjust policy as needed to meet their economic
objectives. Regular reviews of monetary policy allow central banks to respond to
changes in economic conditions, such as inflation, economic growth, and
unemployment, and to adjust the supply of money and credit to promote their
desired outcomes in the economy. This helps to maintain stability in the financial
system and support overall economic health of a country.

Regular reviews of monetary policy also allow central banks to respond to emerging
economic and financial trends and to examine the impact of previous policy
decisions. For example, if the economy is slowing down, the central bank may lower
interest rates to stimulate economic growth and increase spending. Conversely, if
inflation is rising too quickly, the central bank may raise interest rates to slow down
economic activity and bring inflation back to its target. That is exactly what the
world's major central banks are doing right now.

Figure: Weighted Average Lending Rate

In conclusion, regular reviews of monetary policy are an important part of the central
bank's overall strategy for promoting economic stability and growth. By continually
monitoring economic conditions of country and adjusting policy as needed, central
banks can help to maintain a healthy and strong financial system and support overall
sustainable economic growth of the country.

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The information in this newsletter is provided for general informational purposes
only; it is not intended as financial advice and should not be construed as such. The
views and opinions expressed in this newsletter are those of the respective authors
and do not necessarily represent those of Ideapreneur Nepal or its affiliates. This
newsletter should not be viewed as a replacement for professional financial advice.
If you have any questions about your personal financial situation, you should always
seek the counsel of a qualified financial expert. Ideapreneur Nepal and its affiliates
do not guarantee the accuracy, completeness, timeliness, reliability, suitability, or
availability of any information in this newsletter and are not liable for any errors or
omissions or any damages arising from the use of or reliance on any information in
this newsletter.

Your financial
instructor
-tulkey

Answers to Puzzle:

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