- Prem Wali
The history of the stock market in our country is not so long compared to other countries. Although the government has taken some steps in its development, it has not been able to speed up. It is not that the investors have not advised the government and its related agencies at different times for its development and management.
Many people in the government did not understand the stock market and did not even try to understand it. On the other hand, they may also see that the government that is formed from time to time is selfish and does not benefit them. At that time, the ministers did not see any benefit in developing the stock market as they were involved in the commission cycle. They seem to be ready to open a new stock exchange time and again. However, it has been broken many times due to lack of commission. The development of the stock market could not be accelerated due to the fact that the government works only for many selfish interests.
Now the time has changed. The current government is not like the previous government. The next governments are also going to come to do some work. The present government has done some work. However, there is still a lot of work to be done. There are people who understand the current finance minister. However, he should also keep the stock market as his priority and direct its bodies to work promptly and demand the results of their work.
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Policy Stability
There is no stability of government in Nepal. The same is true of every organization. It seems that investors have to decide their investment by looking at the minister who will be the best. Because there is no stability in the policy related to the stock market. It seems that the investment policy should be made by looking at the Governor of Nepal Rastra Bank and who is the boss of SEBON and NEPSE. Because there seems to be any policy change at any time. This distracts investors. Sometimes the Rastra Bank will implement the new rules and sometimes the Sebon will give the rules again.
Another thing is that if one organization misbehaves, then there is a tendency to impose rules on all companies. If the organization is strong and makes good returns, it should be able to pay its investors as much dividend as it can. However, the Rastra Bank cannot do anything just because it is its right. It is strange to see that the Ministry of Finance is also silent on this matter.
At present, there is no company that investors can choose and invest in for the long term. This is because a company that is well-invested may not be able to distribute dividends even if it has the capacity to make policy changes. Therefore, the government or the concerned body should not change its policies and regulations.
Supply increased in Nepal’s stock market, but demand decreased{
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Nepal’s stock market has been growing rapidly in recent years. The supply of new companies in the market through IPO, FPO, bonus shares and right shares is continuously increasing. However, on the contrary, the demand in the market has not increased enough. This is due to market volatility and weak investor confidence.
Demand Enhancement Measures
Restore Faith
- Cebon and the government must ensure transparency, regular reporting, and consistency with regulations.
Strict legal action is needed to control TAG_OPEN_li_68 insider trading.
Increasing Institutional Investment
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The market now seems to be more of a private investment. Due to the manipulation of individuals, the market fluctuates and traps new investors and spoils the investment environment in the market. As a result, bad companies are more likely to run than good companies. This trend may also have an impact on the correction of the market. Increasing institutional investors increases their long-term investment, which increases the stable demand of the market.
Attract new investors
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- To bring new and young investors to the market by conducting awareness programs for stock investors.
- To formulate a policy to attract Non-Resident Nepalese (NRNs) and foreign investors.
Increase the limit of share margin loan of the bank{
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At present, even if the government has removed the limit of Rs 250 million for individual share loans, there is not much money coming into the stock market because 40 per cent of the primary capital does not come into the market. Currently, 72 lakh investors have opened demat and 27 lakh are active investors. If 5 lakh investors take an average share loan of Rs 10 lakh, then 5 trillion rupees will be needed. At present, the primary capital of development banks and commercial banks is Rs 6.5 trillion. Of this, 40 percent will be able to lend only Rs 260 billion. At a time when it is difficult for banks to manage liquidity, if the Rastra Bank eases share loans, it will bring money to the market and the frozen money in the bank will also be circulating. However, now most banks are not in a position to give loans even if they have money. Because the limit given by the Rastra Bank has expired.
There is also a stock market sector that can be made fast now. With the participation of small and big investors, from youth to old people, students to institutions, housewives to businessmen, there is a situation where other sectors can also be mobilized as this sector becomes active. In such a situation, the government should take seriously the suggestions and demands of the investors for the development of the stock market and make the stock market dynamic.
(The writer has been active in the stock market for a long time.) )
