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Eagle Eye: Sanima Bikas Bank and NEPSE Swing

Published by Octron on June 1, 2010

Note: This article has been submitted by Third Eye, if you also want to share good articles self written then please mail us to editor@nepseguide.com

“So Ja Beta, So Ja.
Nahin To Gabbar Aaa jayega…”

Who can forget above lines from the popular Bollywood movie - Sholay.

Investors are experiencing once again similar fear. Instead of Gabbar, its the Maoist Regime. Last time when Mr. Bhattarai became finance minister NEPSE started tumbling down as people believed Maoist are socialist - who believed in Robin Hood story. His VDIS scheme, CGT increase, threatening top businessmen in Nepal for tax and heavy taxation scared the investors away. Wise ones (Small and Medium Enterprises, industries) fled to the neighboring country and so did Nepal’s Capital (Investment) and any future development prospects.

After CA term extension and prospects of new government formation (with Maoist Leadership) news hit the marquee, Big players meticulously planned a game to offload their shares and run away. Biggest of all, Promoters of Sanima Bikas Bank Ltd. seemed to be in pretty rush to sell of their part of liabilities (ohhh.. ya, shares are after all liability in Nepal now). The promoters of the bank seem to have watched Sholay pretty well, that’s why they instantly paid heed to the warning of Gabbar (i.e. Maoist Supremo). Before, Maoist could come into the government, the promoters offloaded around 10 Crore value shares within just two days of trading (30th & 31st May, 2010). BTW, We all know who were the major promoters of the Bank - NRN (Non-Reliable-Nepali’s) members.
There is a saying (from the movie The Usual Suspects);

The biggest trick the devil ever pulled was, He made the world believe that He didn’t exist.

The latest NRN membership card was distributed actually not to bring in the investment from the NRNs into the Nepal, but to divest from the Nepal.
I have argued zillionth time, why would NRN not invest in Nepal ?
I hope will not have to repeat that again.

Now, promoters of Sanima Bikas Bank can easily take Rs. 10 Cr. (~ $1.37 Million) from Nepal to wherever they like LEGALLY.
Will that be categorized as Capital Flight?
I really doubt that.

As per the NRN membership policy NRN can invest, own property in Nepal as well as sell or/and take the earnings from Nepal to wherever he/she likes. So, that clearly gives promoters of Sanima Bikas Bank, where ever they might be can now legally take 10 Cr. to wherever they want?

So it was Sanima Bikas Bank’s promoter shares sales (worth Rs. 88,000,000) transaction amount which propelled the NEPSE index to rise beyond ones control on 30th May 2010. Plus the smart players easily influenced others with CA term extension and end of political deadlock talks. Relieved investors once again jumped back into the market only to find themselves trapped inside the dark bearish pit. Last two days of downward trend after huge surge on 30th May have clearly given idea to all the investors about huge flooding of shares floating in the market. All fearing, the Gabbar. Trying to offload as soon as possible, before Gabbar comes.

Disclaimer by Author: I am not affiliated to any political party, neither do I hate Moaist party nor like any other party. I am simple investor, who has lost lakhs of rupees in past few years due to NEPSE fall down. I am sharing my thoughts based upon current market scenario and trading trends, which might provide some future insights to the other investors like me.

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