Kathmandu, August 8 :

With a view to arrest ‘unscrupulous’ elements impeding the stock market and to modernise the market, Nepal Stock Exchange Ltd (NEPSE) is planning to introduce a new strategy.

The strategy follows the recent crash in stock market after Nepal Rastra Bank (NRB) announced its monetary policy reducing capital adequacy ratio to 11 per cent from an earlier 12 per cent. The strategy aims at curtailing ‘unhealthy activities’ in the capital market

Rewat Bahadur Karki, the newly-appointed general manager of NEPSE disclosed to The Himalayan Times that the strategy is being introduced in a bid to modernise the market as it still runs in a traditional style. Karki said that he would consult with all concerned stakeholders of the market to make it stronger and flexible, with a focus to develop its autonomous power.

Stock market reform should be done according to financial sector reform if we are to protect our small investors, Karki said. He said that automation is very much lacking in Nepali market. “The Securities Ordinance passed during the Royal regime, is barring us to move strongly,” according to Karki.

He disclosed that NEPSE management would start a voluntary retirement scheme (VRS) and inject new, energetic and professional people to make stock trading more competitive like in other countries. In his word, stock market has not grown and has been stagnant. About 45 employees work at NEPSE, currently.

Dr Dandapani Poudel, former economic advisor to the central bank, alleged that earlier stock market players did play an unhealthy role in stopping automation of the capital market. Poudel said that if automation is done, chances of manipulating the market would be minimal. He said, stock market’s reform is an urgent need, adding NRB had no policy consistency and lacks homework to send positive message to the stock market. Monopolisation of broker members and traditional working style should be stopped, Poudel warned.

Karki said that immediate reforms are needed. He was quite critical of NRB for decreasing the capital adequacy ratio to 11 per cent from an earlier 12 per cent.

NEPSE bounces back :

Kathmandu: Share trading at the Nepal Stock Exchange Ltd bounced back with today. The loss of market capitalisation of over Rs 10 billion following the declaration of monetary policy, has almost been recovered, says general manager of NEPSE Rewat Bahadur. Market capitalisation has reached Rs 97,847.27 million today. The NEPSE index stood at 390.86 points. Following the announcement of monetary policy, NEPSE index had declined to 355 points from the 398 points. —HNS