Over 74.6 Million Locked-in Shares Set to Enter Nepal's Stock Market This Month

Nepal's stock market is facing growing pressure as supply continues to outpace demand, contributing to the prolonged decline of the Nepal Stock Exchange (NEPSE) index. Market participants argue that sustainable growth and stability can only be achieved by strengthening demand, as the continuous influx of new shares has prevented stock prices from recovering despite improving fundamentals in some sectors. Investors say the market is already struggling to absorb a steady flow of initial public offerings (IPOs), rights shares, and bonus shares, while the expiration of lock-in periods for large blocks of promoter, employee, and local investor shares is adding further pressure. With buying demand remaining relatively weak, the increasing supply of shares has weighed heavily on prices and weakened overall market sentiment. The pressure is expected to intensify over the next 10 days, with the lock-in period for more than 74.68 million shares of four listed companies set to expire before the end of the Nepali month of Asar. Once the restrictions are lifted, these shares will become eligible for trading on the secondary market, potentially increasing selling activity. The companies whose locked-in shares are scheduled to be released include Three Star Hydropower, Upper Syange Hydropower, IME Life Insurance, and Ghorahi Cement. The unlocked shares comprise holdings of promoters, local residents, and employees that were previously restricted from trading following the companies' public offerings. Among them, approximately 4.2 million shares of Three Star Hydropower and 1.56 million shares of Upper Syange Hydropower will become tradable. Similarly, around 28.6 million shares of IME Life Insurance and more than 40.31 million shares of Ghorahi Cement—the largest single block in the group—will also be released into the market. Investors fear that the addition of such a large volume of shares within a short period could significantly increase selling pressure, particularly at a time when market liquidity remains weak. Unless investor demand improves, analysts believe the expanded supply could further weigh on share prices and prolong the downward trend in Nepal's secondary market.