KATHMANDU, Dec 23: Even before the government has cleared the legal decks for non-resident Nepalis to make investment in stock market, Non-Resident Nepal Association (NRNA) officials have announced plans to pour an initial investment of nearly Rs 10 billion into Nepal’s capital market.
Meeting the chairman of Securities Board of Nepal (Sebon) Rewat Bahadur Karki this week, the newly elected executive committee of NRNA expressed interest toward utilizing their investment in Nepal through capital market. They have also sought the Sebon’s support toward bringing in investment of NRNs living around the world.
Though attracting NRNs’ investment in Nepal’s capital market and secondary market has been under discussion for years, there has not been any substantive homework to clear the legal hurdles for investment by anyone other than Nepali citizens. So far, only Nepali citizens or firms registered in Nepal are allowed to trade in Nepal’s secondary market while the foreign exchange regime restricts moving foreign currency out of the country.
Sebon recently took the initiative to allow NRNs to make investment in Nepal’s stock market. A committee under Sebon’s executive director Niraj Giri has been formed to work toward allowing NRNs to invest in the stock market. Earlier in October last year, Sebon had formed a committee comprising of a member each from the Ministry of Finance, Nepal Rastra Bank, Nepal Stock Exchange, and the Non-Resident Nepali Association. During the meeting with Sebon’s chairman Karki, NRNA President Bhaban Bhatta said that NRNs residing across the world are interested in making institutional investment in Nepal’s capital market. He also urged Sebon to make the amendment in rules and regulations to pave the way for the investment of non-resident Nepalis in Nepal’s stock market.
According to Sebon’s chairman Karki, the committee formed under Karki has been carrying out necessary study to bring in capital of NRNs in Nepali market. He also said that the board has also drafted alternative investment regulation, which proposes allowing investment through various windows like venture capital, private equity, hedge fund, and NRN fund.
Even the government had announced in its budget speech for Fiscal Year 2010/11 that investment of non-resident Nepalese in the capital market will be allowed, the plan have not materialized yet.
Analysts say that trading in stock market where even Nepali citizens face hassles calls for a legal and operational overhaul to bring in NRNs’ investment. While the stock market could be of great interest for NRNs since it provides them liquidity compared to other direct investments, some conservatives also worry about the capital flights if foreign investment is allowed in the market.