Investors bypassed by White Paper
The stock market maintained its gain for the second week despite being bypassed by the new Government's first official economic statement: the White Paper, a compromise -work that substitutes ruling Maoists' aspiration of supplementary budget and CPN (UML)'s plan for full fledged
advance budget. The Nepal Stock Exchange gained 6.53 points (2.13 %) in the three trading day-week.
NEPSE had posted 466.67 points on the first day in the week. It declined a bit on second trading day to 365.34 points. Then it went up to 373.22 points, the closing figure for the week. Analysts find the gain more connected with the growth of four sub-sectors - hydropower, others, commercial banks and development banks than any other financial factors. The investors' expectations at the closing of third quarter may have partially contributed to the rise of NEPSE.
For a period when investors have not been able to be in focus of the minders of national economy, the positive NEPSE Index should be dubbed
somewhat sarcastic. Although in words Prime Minister Jhala Nath Khanal, deputy Prime Minister and Finance Minister Bharat Mohan Adhikari and their coalition partners - Maoist leaders - emphasize the role of private sector in Nepal, the views did not get reflected in the White Paper. The document appears flawed because it virtually sidelines investment or production in its hurry to concentrate on distribution.
Moreover, it lacks economic vision - short term or long term. It is more suffocated by political passion for making the UML- Maoist-coalition
government's presence felt than economic rationale. It has, of course, some virtues: it has clearly declared "the government is different from that of MKN, economic schemes could be worked out in short notice, the unspent resources for development could be spent even at the fag end fiscal 2010-11."
For the new leadership of entrepreneurs in the Federation of Nepali Chambers of Commerce and Industries, the past week's NEPSE-gain could be
termed the lucky number to begin work. Newly elected FNCCI President Suraj Vaidya, the first female Vice-President of the Organization Bhawani Rana, senior Vice- President Bhaskar Rajkarnikar and several new-faces -youth- investor-leaders might interpret it as "auspicious", too, while taking oath for their fresh responsibilities in the apex body of private sector.
Investors had high hope from the economic policy-document of the new government. They thought the White Paper would address the high bank
interest rate troubling investors and liquidity crisis squeezing banks. It instead emphasized waiving duty and subsidy. It has not sufficiently addressed various other problems facing Nepali economy at the moment particularly the double digit inflation, unspent development budget, worsening balance of payment, and slow rate of growth. It has not sought to promote investors to capitalize on the enthusiastic atmosphere of Nepal Tourism Year 2011.
Stock dealers in the meanwhile speculate eagerly: what the White Paper did not do for them, the prospects of digital deal in NEPSE-market might do in future.
The writer can be reached at [email protected]. Nepalnews.com April 17, 2011