June 23: Nepal Stock Exchange (Nepse), which has about 1.7 million investors and capitalization of more than Rs 1.5 trillion, has been closed for three months after the government impose lockdown on March 24. However, neither the regulator Securities Board of Nepal (SEBON) nor the Ministry of Finance (MoF) are showing any concern to opening it.
For many investors it is mysterious that MoF, which is putting its focus currently to collect taxes due to decline in revenue, has also become unconcerned when a market, which is itself a source of tax, is closed for such a long time. Even though the government has eased the lockdown, investors have become outraged due to the continuous closure of the stock market.
On Monday, SEBON formed a committee, comprising of representatives of NEPSE, CDS and Clearing Limited, and representatives of associations relate to securities brokers and stock investors, to study the possibility of opening the stock market.
Stakeholders say that it is not necessary for the regulatory body to form a committee and consult other agencies at a time when most of the business activities have resumed. “It is a weakness of SEBON,” said investor and stock market analyst Dilip Munankarmi.
However, SEBON seems to open the market only by improving many aspects of the capital market including bank integration and T-plus-One transaction clearance. According to Bhisma Raj Dhungana, chairperson of SEBON, the board is working in a way to ensure that the market would not be closed again. He says that the board plans to move ahead only after identifying the current market situation and improvements that are necessary. According to him, the committee will submit the report by June 26. “The market has been closed for a long time. We are taking initiative to reopen it smoothly as soon as possible for this will also affect our future plans,” says Dhungana, “Based on the committee’s report, the market will reopen properly.”
Investors, on the other hand, think that it is illogical to say that the market will only open after making improvements, as nothing was done during the three months of the lockdown. They claimed that the board has not paid attention to their suggestions.
According to investor and stock analyst Prakash Tiwari, closing the market indefinitely will not create capital and liquidity. He believes that this will send a negative message internationally while preparing to open investment to non-resident Nepalis.
Chief Executive Officer of NEPSE Chandra Singh Saud said that no problems exist in the online trading system. He mentioned that they are ready to open the market once SEBON gives instruction. According to him, NEPSE is requesting for the username and password to be added to the system as the investors have to get it themselves. He has requested all the investors to integrate their bank accounts as many people are doing business online through connect IPS from abroad.
Stockbrokers also stressed on the need to open the market immediately. “The market should have never been closed. But now that many businesses have come into operation, the stock market should also be opened,” said Ishwor Rimal, chairperson of the Nepal Stock House. “Closing the stock market that has been running for 27 years gives negative messages,” he said adding that the government has been losing millions in revenue every day while the market is closed.
Meanwhile, investors are expressing divided opinions regarding the opening of the market. President of Nepal Stock Investors Association Uttam Aryal stressed on the need to operate the market based on policies and rules rather than the wishes of individuals. Furthermore, he also said that the concerned bodies need to take initiative to help at least 51 percent of nearly 300,000 investors to participate in the online trading system.
He suggested that the authorities to implement necessary arrangements to safeguard the investors, who have already lost more than Rs 63 billion in stock investments during the lockdown, from hit by margin call when the market resumes.