July 3 years ago
Securities Board of Nepal
SEBON Journal, Vol. III, July 2007
Creating a Dynamic Capital Market
-- Deepak Raj KafleпЂЄ
Nepalese financial system is usually characterized by little but an expanding capital industry. During the past 14 years of their operation, securities market has witnessed 3 market phases of ups and downs. The latest upswing started from your fiscal year 2002/03 and is also continuing. Within this phase, Nepse index, the industry indicator climbed from 205 to 621 (July twelve, 2007). The industry capitalization with the listed stocks climbed coming from Rs. 35. 24 billion to Rs. 169. 05 billion throughout the same period. During the past five years, capital mobilized through public issue and legal rights offerings has been around the track of Rs. 8. four billion coming from 109 problems. In the financial year 2006/2007 alone, capital worth of Rs. 2 . 8 billion dollars has been broken up from thirty four issues.
Despite expansion in proportion, the investments market is yet to make top quality transformation increasing depth and maturity. Industry lacks sectoral diversification of performing listed firms, access to second trading services is limited, openness and efficiency of the issuer and market is not satisfactory, capacity from the regulator, exchange and the players is limited, the market is highlighted by lively individual shareholders and the institutional investors happen to be conspicuously missing. The market infrastructures supporting the trading, clearing and arrangement are not enough. Thus your energy to build a dynamic market is going to end up being an die hard task needing a lot of commitment and efforts of the government, limiter, market place, maker players plus the investors. The vision for any new Nepal has to have an important place for any dynamic capital market. It should be a market in which issuers possess choice to tap the funds in lower cost while people have decision to invest in the securities based on a risk and return. Essentially, securities marketplace is a mechanism that gives public entry to ownership and share benefit from the expense. The finance requirement to finance the establishment and expansion of corporate sector can conveniently пЂЄ
Chief, Securities Plank of Nepal
SEBON Journal, Vol. 3, July 2007
come from capital marketplace as these entities venture to tap the opportunities in the economy.
The perspective of a attractive capital market assumes which a country offers respectable level of and noticeable progress in country's governance. Some areas of governance just like rule of law, effective tax supervision, and politics stability to make certain consistency and continuity of economic procedures, directly impact the confidence of household and foreign investors available in the market. The governance parameter, particularly the market related ones, should be improved so as to make a meaningful breakthrough in the capital market sector. It is very well understood that large number of intermediaries, institutions and professionals would be the players and advisors energetic in capital market. Rules and laws and regulations governing the administrative centre market will be diverse, numerous and sophisticated too. At this point of time, Nepalese capital marketplace is focusing on reforming the laws, regulations and policies, building institutional capability, above all imagining a dynamic capital marketplace in order to tap the inherent potential and managing the cross line issue and trading of securities. This information intends to focus on important change initiatives plus some critical facets of capital market development in Nepal.
Legal and regulatory aspects
Authorities is liable to frame securities laws and regulations and devolve power to make regulations. The us government also has it is role in formulating capital market expansion plan and addressing monetary, fiscal and public borrowing policies bearing close cordons to the capital market expansion. Government strategy should support appropriate structure, incentives and infrastructure for the capital market. Nepalese capital market has...
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