Young Generation Losing Faith in Nepal’s Stock Market — Can Confidence Be Rebuilt?
Over the last few years, Nepal’s stock market has witnessed one of its most paradoxical phases. On the one hand, participation numbers soared as new investors—mostly young Nepalis—flocked to open DEMAT and Mero Share accounts, inspired by stories of quick wealth and the convenience of mobile trading. On the other hand, a quiet disillusionment has taken hold. Many young investors now view NEPSE not as a platform for disciplined wealth creation, but as a speculative arena tilted against small investors.
This growing distrust among the youth is dangerous—not only for the stock market but for Nepal’s broader economic modernization. If the upcoming generation turns away from equity markets, the country risks losing a vital source of domestic savings mobilization and entrepreneurship funding.
Why the Faith Is Fading
1. Lack of Market Transparency and Information Access
For most young investors, the NEPSE remains a black box. Corporate disclosures are limited, quarterly results arrive late, and company analyses are scattered across informal platforms rather than standardized repositories. Many rely on social media “tips” or Telegram groups instead of verified research, often ending up victims of misinformation and herd behavior.
2. Volatility Without Explanation
The market’s movements often seem detached from economic fundamentals. Share prices can swing wildly within days, leaving young investors puzzled. The absence of clear communication from listed companies and regulators fuels the perception that the market is driven by insiders, not information.
3. Limited Product Options
NEPSE still revolves around a narrow range of shares—mostly banking and hydropower companies. Young investors seeking diversification have few instruments to choose from. The absence of Exchange-Traded Funds (ETFs), mutual funds with active management, derivatives, or bond markets means investors are forced to either sit on cash or speculate in a handful of volatile scrips.
4. Regulatory Uncertainty and Delays
Policies are frequently discussed but rarely implemented on schedule. Promised reforms such as short-selling, intraday trading, and securities lending have been “in process” for years. Young investors, accustomed to digital efficiency, lose patience with bureaucratic inertia.
5. Lack of Investor Education and Protection
While thousands enter the market every year, very few understand how to evaluate a balance sheet, assess risk, or diversify. Without proper financial literacy programs or risk disclosures, many first-time investors lose money quickly—and their trust even faster.
The Consequences of Lost Confidence
The immediate impact of declining faith is visible in lower participation and shorter holding periods. Many investors now treat stock trading like a lottery—entering during hype and exiting after disappointment. In the long term, this erodes the very foundation of the capital market.
A disengaged young population means fewer long-term savers, reduced liquidity for new IPOs, and a stagnating equity culture. More critically, it discourages innovative startups and small enterprises from considering public listing as a viable growth path.
How to Rebuild Confidence: A Roadmap for Reform
Restoring faith requires more than slogans—it demands visible action, transparency, and modernization. Below are five concrete reforms that can restore young investors’ belief that the market is fair, accessible, and worth their time.
- Radical Transparency in Corporate Disclosure
- Make quarterly and annual reports available in a centralized, easily searchable online database maintained by NEPSE or SEBON.
- Enforce timely reporting and penalize non-compliance.
- Introduce summary infographics and financial dashboards for each company so even first-time investors can understand performance.
Transparency is the foundation of trust. When data is public and reliable, speculation is replaced by informed decision-making.
- Launch New Market Instruments
Nepal’s market structure is outdated for a generation raised on global financial apps. The introduction of Exchange-Traded Funds (ETFs), index funds, intraday trading, and securities lending and borrowing can revolutionize participation.
ETFs, for example, allow small investors to own a diversified basket of stocks with minimal risk and low fees. Similarly, securities lending and short-selling add liquidity and prevent price bubbles. The Finance Ministry has already discussed these reforms—now they must move from paper to practice.
- Build Financial Literacy from the Ground Up
Universities and business schools must partner with regulators to introduce practical capital-market modules. For schools, simulation platforms with fake money but real data can teach teenagers how markets work before they invest their savings.
Financial literacy should not be optional—it should be built into the structure of the market itself.
- Strengthen Investor Protection and Regulation
Young investors need assurance that regulators are watching out for them. That means:
- Faster investigation and penalty on manipulative trading or insider leaks.
- Accreditation for financial influencers—anyone giving stock advice publicly must be certified by SEBON.
- A robust Investor Grievance Redressal System, where complaints are tracked transparently.
When rules are enforced and wrongdoers punished, confidence follows naturally.
- Digital Innovation and Youth Integration
To connect with the digital generation, the market must meet them where they are: on their phones.
- Launch a youth-focused mobile app integrating NEPSE data, research reports, SIP (Systematic Investment Plan) options, and gamified learning modules.
- Enable fractional investing—allowing users to invest as little as NPR 100 in an ETF or stock.
- Create a “Student Investor Account” with lower fees and educational content embedded in the interface.
Such features transform the market from intimidating to inclusive.
Reform Is Not Optional—It’s Urgent
Nepal’s demographic dividend will last only another two decades. By 2045, the country will have a smaller working-age population. If the current generation of youth loses faith in domestic financial markets, their capital and innovation will migrate abroad through crypto, remittances, or offshore investments.
Restoring credibility to NEPSE is not a technical challenge—it is an emotional one. The market must show that it respects the intelligence, time, and aspirations of young investors. Transparency, product diversity, education, and enforcement are the four pillars of that trust.
A transparent, modern, and youth-driven stock market is not only good for investors—it is essential for national development. Nepal cannot build industries, fund startups, or sustain infrastructure through loans alone. It needs a vibrant equity culture where young Nepalis invest not out of speculation, but out of belief in their country’s future.
In the end, the question is simple:
Will Nepal’s financial institutions rise to the occasion and modernize for the new generation—or will they watch as the next generation takes its savings elsewhere?
The answer will determine whether NEPSE becomes a symbol of national progress—or a missed opportunity.
Article By: Aman Sah
