Economic Digest: Key Business Developments in Nepal
KATHMANDU – The Economic Digest provides a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries. This week, we delve into the fluctuations of the NEPSE index, the soaring gold prices, the growth of small industries in Karnali, the financial performance of banks, the progress of the Tanahun hydropower project, and the loss of a prominent tourism entrepreneur.
NEPSE Index Declines Amid Market Fluctuations
The Nepal Stock Exchange (NEPSE) index experienced a notable decline of 47.44 points, or 1.72%, closing at 2,697.91 on Sunday. This downturn follows a minor increase of 2.47 points in the previous session, indicating a shift in market sentiment. Trading commenced at 2,733.35, but the index fluctuated significantly throughout the day, reaching a low of 2,689.46 and a high of 2,748.78.
Despite the negative performance, trading remained active, with 315 stocks traded through 88,714 transactions, resulting in an overall turnover of Rs. 8.18 billion. A total of 20,868,919 shares were exchanged, highlighting the resilience of investors in a volatile market.
Gold Prices Surge Amid Geopolitical Tensions
In a parallel development, gold prices in Nepal have soared to Rs. 165,000 per tola, driven by international market trends influenced by geopolitical tensions and uncertainties surrounding the upcoming U.S. elections. This marks an increase of Rs. 600 from the previous day, reflecting a consistent upward trajectory in local gold prices.
Internationally, gold is currently priced at 2,721 US dollars per ounce. The surge in prices can be attributed to rising demand for gold during times of conflict and uncertainty, as investors often turn to this precious metal as a safe haven.
Small Industries Flourish in Karnali Province
In the current fiscal year, Karnali province has seen the registration of 1,795 small industries across its 10 districts. However, 410 such industries have been abrogated, indicating a mixed landscape for small businesses. According to the Directorate of Industry and Consumer Protection of Karnali Province, about a quarter of the registered industries have faced annulment in the fiscal year 2080-81.
The breakdown of annulled industries includes 166 in Surkhet, 81 in Jumla, 37 in Kalikot, and several others across the province. This growth in small industries is a positive sign for local economies, although the abrogation of some businesses raises questions about sustainability and support for entrepreneurs.
Commercial and Development Banks Report Mixed Profitability
The latest financial report from the Nepal Rastra Bank indicates a positive trend in the profitability of both commercial and development banks up to Bhadra in the fiscal year 2081/82. Commercial banks collectively achieved a net profit of Rs. 17.69 Arba, with Nabil Bank leading the pack at Rs. 1.66 billion. Other key players like Global IME Bank and Nepal Investment Mega Bank also reported strong performances.
However, the development banking sector presents a mixed picture, with a combined net profit of Rs. 1.64 billion reported. Notably, six out of 17 development banks faced losses, underscoring the need for strategic improvements within the sector. Muktinath Bikas Bank emerged as the top performer, highlighting the disparities in profitability among banks.
Progress in the Tanahun Hydropower Project
The Tanahun hydropower project, with a capacity of 140 MW, has achieved significant progress, reporting 58.1% completion. The project is being executed in three packages, with 52.07% of the financial progress achieved. Construction of structures, including dams, has reached 35% completion under Package 1, while the construction of power plants under Package 2 stands at 59%. Additionally, 73.5% of the construction of transmission lines under Package 3 has been completed.
The project aims for completion within the next two years, targeting a deadline of Asar 2083 BS. This development is crucial for enhancing Nepal’s energy capacity and supporting economic growth.
Mourning the Loss of Basanta Misra
The tourism sector in Nepal is mourning the loss of prominent entrepreneur Basanta Misra, who passed away at the age of 71 due to a dengue infection at Norvic Hospital in Thapathali. Misra’s family confirmed that his body was taken from the hospital to his residence in Kupandol, where he will be cremated at Pashupati Aryaghat.
As the Chairman of the Temple Tiger Group of Companies, Misra was a significant figure in Nepal’s tourism industry, contributing greatly to its development since the 1970s. His passing marks a significant loss for the sector and the broader business community.
Conclusion
The economic landscape in Nepal continues to evolve, marked by fluctuations in the stock market, rising gold prices, and the growth of small industries. While some sectors, like commercial banking, show promising profitability, others face challenges that require strategic attention. The ongoing progress in infrastructure projects like the Tanahun hydropower project offers hope for future economic development, even as the nation mourns the loss of influential figures like Basanta Misra. As these developments unfold, stakeholders across various sectors must remain vigilant and adaptable to navigate the complexities of Nepal’s economy.