Why the Exchange and the Regulators Can't Attract More Local and Foreign Investors?

Why the Exchange and the Regulators can't attract more local and foreign investors?

The following list of 12 financial market information metrics has been objectively chosen to help the Nepalese financial market community understand why these factors are crucial for boosting investors' confidence, both individual and institutional. Investing is a business with a very clear profit motive, namely to buy low and sell high. In the process of pursuing their financial goals, investors could also engage in ethical reasoning. More frequently than in the past, ethical issues have exploded in the news and on social media, which makes regulation challenging.

Everyone who engages in the financial market, often known as the share bazaar, is a businessperson looking to make money. Not an easy task at all! Because it is connected to money, which is valuable, the financial market is still the area of the economy that is most frequently addressed in the media, among organizations, and among people. And it's reachable.

Believe it or not, stock markets had adopted the color red and the color green from the traffic lights! In the above table, NEPSE scored 10 red and 2 green whereas the US operations represented by the S&P 500 scored 12 out of 12.

By contrasting the least developed stock market with the most developed stock market in the world, I do not mean to highlight the subpar performance of NEPSE. However, the question is why, despite a positive track record and the presence of independent regulators, NEPSE does not use these fundamental and crucial characteristics. With the political climate being stable and the market developing adaptable information and technology, even at a basic level, the past ten years have brought us some positives. We have the advantage of witnessing our regulators visiting the most developed stock exchanges across the world pretty frequently these days, but why aren't our investors aware of or educated about 10 of the 12 crucial parameters?

Assuming that I am a representative of the well-wishers of the Nepalese financial market, I respectfully implore the SEBON and NEPSE Chairpersons, who have the power and obligation to act in the best interests of investors, to Please Do It. The following 10 missing characteristics in NEPSE are extremely necessary and are activities that can be completed with minimal effort, minimal expense, and minimal time.

The stock market is key for economic development, and that’s the reason the exchange and the regulator(s) need to the serious efforts on how to formulate the appropriate processes to preserve the interest and the money of the mass (people)? And, how to build a reliable system to manage the flow of money involved in the operations of the financial market?

The stock market has been around for more than 400 years in developed nations, and although it has operated in Nepal for almost 30 years, we still have some fundamental difficulties in getting fast, accurate market information. It is clear that some MUST DO essential measures to link our stock market with the real stock markets in China and India, as well as the US stock market, among others, are lacking.

Bottom line:

NEPSE is operating at half sights which is not sufficient to take 5 million-plus investors to a logical direction. The SEBON, despite being an autonomous regulator has failed to implement the basic stock market information mechanism which is the one and only factor every investor - either local or potential foreign investors seek to analyze before making their investment decisions. Millions of NRNs may have billions of USD holdings, a potential pool of Nepalese foreign direct investment to help solve the prevailing depleting foreign exchange crisis. Investing in the financial market with historical accounting information is just a half sight and another half is the future projections/guidelines of the public companies. So that, investors could analyze the market information and commit their hard-earned savings to the equities, the riskiest asset class, and wait to achieve the projected financial rewards. At this time, the financial perspectives have totally been changed due to the complexities in the global economic environment and the challenging personal finance situations so without tangible efforts, attracting foreign investment to stabilize the currency crisis might be an unachievable dream in the Nepalese context.

-Sudarshan Kadariya

Disclaimer: The opinion presented in the article is my personal opinion and the article is written for educational purposes, readers are advised accordingly. I am reachable at su.kadariya@gmail.com