Its right time to invest in stock market: Governor

KATHMANDU, Feb 25: 

Nepal Rastra Bank Governor Dr Yuvaraj Khatiwada on Friday called on investors to pump money into the stock market, saying that macroeconomic indicators suggest this is the right time to make investments in the capital market.

 His comments come at a time when Nepal Stock Exchange (Nepse) index has plunged over 73 percent to 312.58 points from an all time high of 1175.38 points in Aug 2008, erasing Rs 321.65 billion from the secondary market till date.

 More pessimistic note is the latest government target to close Nepse index at 350 points at the end of this fiscal year from 378 points recorded in the beginning of this fiscal year.

 “The performance of the stock market has been unenthusiastic largely because of low investor confidence; this has nothing to do with government policies or roles of regulatory bodies,” Dr Khatiwada said, expressing hope that the stock market will soon pick its way up as macroeconomic indicators, including growth estimates, inflation target and balance of payment situation, are positive.

 He also expressed hope the performance of banks in the first half of this financial year “which was better than expected” will prop up market confidence.

 “Many were hoping banks, which are mired in real estate problems, would come up with depressing results,” Dr Khatiwada said. “But the first half results show they are in a better position than expected.”

 Banks and financial institutions make up around 75 percent of the listed companies in Nepse. In the first half of fiscal year, the profit growth rate of these institutions fell.

 “But they still managed to churn out profits and that is the important thing,” Dr Khatiwada said. “Yes, their provisioning may have gone up in the period but that was done to create buffers and it does not mean they have started generating losses.”

 Investors, however, said they are not interested in putting their money in stock market as bank deposits give better returns.

 “Bank deposits give us up to 15 percent returns, whereas this is not the case in the stock market,” Dipak Karki, president of Small Investors Association. Other investors asked the government to bring down the lending rates so that credit becomes cheaper and more money can be funneled into the local bourse.

 Finance Secretary Krishna Hari Banskota said the government is serious about shoring up the flagging stock market and directed the Securities Board of Nepal to design a “package” to lift Nepse index.

Source: Republica