Nepal's Stock Market Surges as Political Stability Appears Post-Election

Kathmandu. The assets in the stock market increased by NPR 273.78 billion in a single day. When the market, which opened after nearly a week, rose by 162.93 points in one day, the market capitalization saw a corresponding increase. With today's trading, the market reached 2875.43 points, the highest in the last 7 months.

The market's reaction came as Nepal concluded its elections and the structure of the new parliament was determined. The parliament shows the Rastriya Swatantra Party (RSP) capable of forming a government unilaterally with nearly a two-thirds majority.

With this arithmetic, it appears that RSP's senior leader and former Mayor of Kathmandu Metropolitan City, Balendra Shah (Balen), will become the Prime Minister in the upcoming government, while economist Dr. Swarnim Wagle, who is also the Vice-Chairman of the same party, is expected to become the Finance Minister.

In the past, changes in government or the arrival of a new Finance Minister used to influence the stock market. There was also a tendency to cause fluctuations in the market by spreading rumors of a change in the Finance Minister even when the government remained in place. With the election results, the identity of the next Prime Minister and Finance Minister has become almost certain simultaneously.

We present the conversation with Tulshiram Dhakal, President of the Nepal Investors Forum, regarding the main reason for the market surge in this situation and what the capital market should look like going forward:

• The market, which had been sideways for a long time, suddenly hit a positive circuit today. What is the reason for this?

The main reason for the stock market hitting the circuit level today is the conclusion of the elections and the formation of a new government. Until the day before the election, there was a kind of uncertainty about whether the election would happen or not following the 'Gen Z' movement. This situation also existed before the holiday started for the election on the 21st.

When the market opened for the first time after the elections, the possibility of political instability ended.

On the other hand, this election guarantees a stable government for five years with a clear majority for a single party. No government since 2064 BS has been able to secure such a clear majority, which has happened this time.

Along with this, the incoming government also has the capacity to amend any laws as it wishes. The market rose by looking at the favorable situation regarding a stable government and legal reforms.

• Looking at the past, the market used to fluctuate based on who would become the Prime Minister or Finance Minister. When Bishnu Paudel was about to become Finance Minister, a positive circuit hit, and when Yubaraj Khatiwada came, a negative circuit hit. Is the fluctuation happening based on this factor now as well?

This also has an impact here. There is talk that Balendra Shah will become the Prime Minister of the new government and Dr. Swarnim Wagle will become the Finance Minister. Both of them are individuals who have proven successful in some capacity.

The trust in the name and work of a young leadership like Balen Shah, who has demonstrated his work in Kathmandu Metropolitan City, has had a big impact.

Simultaneously, the news that the reins of the economy are going into the hands of Dr. Swarnim Wagle has added icing on the cake for the market. He is a person who has worked internationally, including at the World Bank, and has closely observed the global economy. Therefore, this level of enthusiasm in the market has come from the convergence of both stability and expertise in one place.

• Looking at the past, Balen's working style appears somewhat more oriented towards socialism. He himself says that he has practiced socialism by working in the education and health sectors in Kathmandu. Dr. Wagle is considered an economist with a capitalist leaning. How will the policies formed by the coordination of these two favor the stock market?

In the 21st century, it is not possible to remain entangled only in the debate between traditional socialism and capitalism. The political revolution has already happened in Nepal; the next revolution must be an economic one. In this context, both individuals share the same vision.

The demands of the Gen Z youth currently require strengthening the economy; there is no alternative. No ideology can survive without economic progress. When Balen's social justice and Swarnim's capital creation policies align, the overall economy becomes dynamic. New infrastructure projects will be built.

As soon as the economy becomes dynamic, the capital market will naturally move. Investors have reacted to the market understanding exactly this.

• So, what is the main expectation of capital market investors from the government to be formed now?

The capital market had been stalled and investors were in a state of confusion for a long time. The friends who are forming the government with a majority should not panic. They should calmly formulate stable policies, rules, and laws for the next 5 years.

We fully expect them to play a crucial role in making the capital market technologically friendly, suitable for the 21st century, by implementing the report given by the Rameshwor Khanal Commission in the past, preparing the structure for a new stock exchange, and starting intra-day trading. The capital market has taken a leap forward with this hope today.