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Confidence Increasing among Nepali Investors after Constituent Assembly Elections

[caption id="" align="alignleft" width="600"]NEPSE Investor confidence growing in Nepal[/caption]

For the first time in nearly 5 years the Nepse Index reached above 800 points in December, 2013. The index hovered around 500 points before the Constituent Assembly (CA) elections. However since the elections held on November 19, 2013, the index has recorded a rapid growth of more than 50% in just 2 months. This has been widely regarded as a sign of optimism returning in the Nepali economy.

A sudden rise after continuous fall

The government owned Nepal Stock Exchange Limited is the sole organization in Nepal through which shareholders of publicly listed companies can trade their stocks. NEPSE index is maintained by the company. Since the failure of the previous CA elections, the general shareholder confidence had been steadily decreasing. At its lowest point before the elections, the index regularly hovered below 400 points. Yet, since the election results were declared, the index has seen rapid growth.

The reasons behind the optimism

Most argue that the victory of the Nepali Congress party is one of the major reasons behind the increase. Governments run by the Nepali Congress are often considered to bring economy friendly policies based on their historical performance. The party that came second was the United Marxist Leninist party (UML) which also is considered to be a party with a stable outlook. The two parties together won more than two-third of the total seats in the elections. Both the parties are expected to unite for rolling out a stable and economically friendly constitution based on their history and election charters. This has been considered to be the main reason behind the increase in investor confidence lately. Since the elections, a few major investment projects have also been announced, that further contributed to the growth in the index.

Further expectation of growth

The index is expected to grow even more once members of the elected government are sworn in. However, political wrangling has contributed to some fall in the index lately. Yet, it's widely expected that once the new government will be formed, the new economic policies will mean further positive growth in the overall economy of Nepal.

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