Strong Government, Strong Future: Why This Market Dip Could Be Investors Best Buying Opportunity

Nepal's stock market fell again on Wednesday, the NEPSE index dropped 74.73 points, closing at 2,776.36. Out of 268 companies traded, 255 fell in price in yesterday’s trading session. In just four trading sessions since the new government was formed, the market has lost nearly 174 points wiping out millions in investor wealth.

Before Balen Shah's government was officially formed, the market had already jumped more than 200 points in excitement. Investors were buying shares not because companies were doing better, but because they believed the country's direction had changed. Once the new government was sworn in, that excitement ran out. People who bought during the rally started selling to lock in profits and prices began falling. Those who bought late are now sitting on losses.

Many stakeholders/analyst of the market says that the new government has started reopening old financial files and arresting high-profile political figures. While this is welcome news for the public, it is creating panic in the stock market. A significant amount of money that was quietly sitting in the share market - money that people could not easily explain is now being pulled out fast before any investigation reaches them. When large amounts of money leave the market at once, share prices drop. On one hand, there was already fear of political confrontation. On top of that, rumours spread that the Department of Money Laundering Investigation was preparing to investigate several businessmen and this shook the stock market as well. The government has already arrested former minister and businessman Deepak Khadka in connection with a money laundering case. Just on Tuesday, news broke that another businessman, Deepak Bhatta, was blacklisted by the Department of Immigration following a letter from the Department of Money Laundering Investigation. This creates the fear in investors and public and they are avoiding to put the money into the market and market is keep falling beyond limits.

Even regular investors with nothing to hide are scared. When they see powerful people being arrested and uncertainty all around, they choose to sell shares and hold cash until things become clearer. This kind of fear spreads quickly - one person sells, prices drop, another person panics and sells too. The cycle keeps pushing the market lower.

Finance Minister Wagle - Trusted, But the Market Is Still Waiting

Investors had high hopes for Finance Minister Dr. Swarnim Wagle, an economist with degrees from Harvard and Australian National University and experience at the World Bank. His appointment had added fuel to the pre-government rally. But since taking charge, no major economic announcement has come. No clear plan on taxes, budget, or the cooperative sector crisis. The market was expecting action and the silence is being read as a bad sign, Minister Wagle is trying to standardized the market structure and his vision is clear towards the development of the financial market however the 100 - day manifesto plan by the government not prioritizes the financial market as major development despite minister Wagle new vision to the market. Many investor says “this fall will crates the excessive buying opportunity later weeks and market will move upward sharply ."