Investment issues not in focus
The phenomenon of a single day upward jump from 391.21 points to 395.43 points made Nepal Stock Exchange special in the past week when it opened for only four days. Although the figure gives NEPSE a marginal gain of 1.24 points for the week, it indicates how alert Nepali stock investors are in the policy-atmosphere under which they do business.
Analysts prefer to interpret the NEPSE gain in the light of political and financial backdrop. The marginal growth of 1.24 points that NEPSE recorded in the past week, they feel, was partly the direct consequence of the Central Bank's openness conveyed to business and industry community.
It was also an outcome of the certainty assured by Maoists' acceptance of positions in Khanal – cabinet despite being denied Home Ministry portfolio. The investors had lost hope in the past month when Prime Minister Khanal and Maoist leader Prachanda unexpectedly failed to translate their words of mutual cooperation into action of giving minimum shape to the government.
Earlier in the week, particularly prior to emergence of the dual factors, NEPSE had dived from 394.19 points to 391.66 and further down to 391.21 in continuity of its falling spree of two consecutive weeks.
Various reviews of contemporary Nepali economy indicate consciousness about the need for emphasis on investment, but fail to ignite appropriate strategy for the same. One example often mentioned in this regard is: failure to make Nepal Stock Exchange smart enough to boost the investment portfolio as per the need of the economy. Yet stock investors have from time to time responded promptly to policy tools.
Nepal Rastra Bank's latest assurance that it would be liberal in policy on realty and margin lending could produce the instant effect on stock investors. It could be argued that the investors would have done wonders if they had got leeway to adjust during the four day trading week. The 10.55 % increase in NEPSE-turnover and last day heavy trading stands as the result of NRB pledge to loosen tight grip on realty and margin lending policy.
Both points, however, cannot assure NEPSE about the end of bearish era in its yard. Neither can they predict continued optimism in overall investment front. Several measures – political and financial – have to be undertaken to create that sort of confidence, say analysts. If the political stability is assured and appropriate financial policy instruments are followed NEPSE might see bright days in future.
NEPSE presented the interesting scene at a time when top decision makers – Deputy Prime Minister and Finance Minister Bharat Mohan Adhikari, NRB Governor key bankers and players of Nepali economy – got engaged in myriad ways in rhetoric on financial problems facing the country.
The backdrop of their talk was provided by separate reviews of half yearly progress of fiscal 2010-11 and the same of monetary policy. The reviews found the economy in a very weak state from the viewpoint of investment. The only way to strengthen it is to boost investment climate by taking investors into confidence by providing the stability they expect from politics and economic policies.
FM Adhikari thinks he will be able to do it well and steadily if a full fledged budget for the fiscal 2011-12 could be introduced in advance. "It would undo the ill effects that two previous delayed budgets did to the economy," he opines.
Several bumps he will have to encounter in the march towards such budget. The first is differences with coalition partners Maoist economists over such budget. Another fresh issue he will have to tackle is the labour front's demand for rise in wages.
Labourers' demand is quite genuine in view of sky-rocketing market price. Making it compatible with the willingness and financial capacity of management is the challenge. How Adhikari presides over the negotiations they will have on it with industry business owners is to be seen.
Another phenomenon troubling Adhikari is the chain effect triggered by oil price rise because of freedom movement in Arab countries, emergency return of Nepalis from there and the subsequent prospect of low remittance receipt. He will have to face them unprepared and without sufficient data analysis. nepalnews.com Mar 6, 2011.
The writer can be reached at [email protected].