Why Nepal’s retail-driven stock market desperately needs big money
Nepal's stock market, NEPSE, is characterized by its retail-driven nature, where sentiment heavily influences prices, leading to volatility. The market capitalization is dominated by banks and financial institutions, with hydropower accounting for a smaller portion despite numerous listed companies. The article argues that the market desperately needs institutional investors like the Employees Provident Fund, Citizen Investment Trust, and Social Security Fund to provide stability. Currently, these funds are legally restricted from significant equity investments, contributing to market fragility. Two key changes proposed are a legislative obligation for these funds to allocate a specified share of assets to listed equities and an independent governance structure for these allocations.
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