Finance Minister’s Efforts to Contain the Stock Market “Landslide”

Kathmandu. After remaining closed for ten days due to the Gen Z movement, the stock market reopened on Thursday (Ashwin 2) with a sharp fall of 160 points. On the very first day of trading, the market faced three consecutive negative circuits, leading to a complete halt in transactions. For the first time in history, NEPSE lost 160 points in a single day, plunging to 2,511.91 points.

Formation of a Task Force

Following this historic drop, Finance Minister Rameshwar Khanal formed a special task force under the leadership of Rupesh KC, the Acting Executive Director of the Securities Board of Nepal. The task force also includes:

• Sharan Adhikari, Director of Nepal Rastra Bank

• Niranjan Phuyal, Acting Executive Director of NEPSE

• Sharad Niraula, Undersecretary at the Ministry of Finance (Member Secretary)

The task force has been mandated to present concrete recommendations and a reform plan for market stabilization within five days.

Previous Commission Report

Earlier, a High-Level Economic Reform Suggestion Commission, also chaired by Minister Khanal, had already prepared a report with 13 detailed recommendations for capital market reforms. The commission suggested:

• Restructuring and recapitalizing NEPSE

• Increasing private sector participation

• Launching a secondary market for government bonds

• Allowing Non-Resident Nepalis (NRNs) to participate in trading

• Expanding margin lending facilities

• Bringing productive industries into the stock market

• Initiating a commodity exchange market, among others.

Demands of Investors

Investors have also forwarded their own demands for market reforms. The major ones include:

• Increasing the personal loan ceiling

• Adjusting capital gains tax to 3% for long-term and 5% for short-term investments

• Modernizing and strengthening the online trading system

• Establishing a new stock exchange for competitive market operation

• Listing small and medium-sized enterprises (SMEs) in the capital market

• Eliminating double taxation on dividends and bonus shares

• Revising broker commission to a one-way system.

To contain the unprecedented “landslide” in the stock market, both short-term immediate actions and long-term structural reforms are essential. If the recommendations of the newly formed task force, along with those of the earlier high-level commission, are implemented effectively, investor confidence is expected to recover and the market could regain stability.