March 5 Polls: Manifestos Put Capital Market in High Priority; Experts Doubt Implementation

Ahead of the March 5 general elections, major political parties have accorded high priority to the capital market in their elections manifestos, continuing a trend seen in previous polls.

Their election manifestos contain ambitious plans aimed at promoting and reforming the stock market. However, experts have raised concerns over the effective implementation of the pledges.  

Newly emerged Rastriya Swatantra Party has proposed restructuring the Nepal Stock Exchange (NEPSE) and the CDS and Clearing Limited (CDSC) to increase private sector participation and develop competitive depository services.

The party has also pledged to introduce new financial instruments, inclujding derivative products such as intraday trading, short selling, and futures and options in a phased manner.

It has accorded high priorities to the investor safety and transparency while adopting zero tolerance against ‘insider trading’ and market manipulation. To enhance transparency, the party proposes making an ‘automatic reporting system’ mandatory for the financial statements of listed companies.

Additionally, it has vowed to make the book building method more transparent so as to protect investors.

In addition of formulating a policy to encourage and expand the role of institutional investors such as pension funds, insurance and mutual funds, it proposes developing both government and private sector bond markets for financing long-term projects.

Likewise, the CPN-UML has highly prioritised the stock market with emphasis on market stability, investor protection, and mobilising large government funds in the market.

It stresses the need to mobilise large funds such as the 'Social Security Fund, Provident Fund, Citizens Investment Trust, and Deposit and Loan Guarantee Fund' in the capital market.

Alongside protecting the interests of investors and making the market transparent, the UML plans to make the structural reforms of the Securities Board of Nepal (SEBON) to make it more accountable and empowered.  

For its part, the Nepali Congress (NC) has pledged to formulate policies allowing Non-Resident Nepalis to invest directly in the secondary market to bring in foreign capital. Similarly, it proposes encouraging real sector companies, including IT and agriculture sectors, to list on the Nepal Stock Exchange so as to diversify the market.

It commits to make SEBON a fully autonomous and competent regulatory body.

Despite these reform-oriented commitments, experts remain skeptical about their implementation.

Stock market analyst Ajay Singh Thapa, who is popularly known as “Jay Sambhoo” said similar reform agendas take place during every election cycle.  “But these reform proposals are forgotten once elections are over.”  

He noted that in Nepal, power-sharing and bureaucratic hurdles often obstruct the formulation and implementation of policies and laws. “The market urgently needs these reform initiatives. But, I have been hearing similar commitments for the past 12 years, and they have yet to be implemented,” he said.