With a few international and Nepali stock trading experiences for over two years of experiences, I thought of sharing a few of my takeaways from investing.
To simply answer the question, I would say “YES, It is a good time to invest in the Nepali Stock Market.”
I believe, a more insightful “YES” can convince you. There are some general benefits of investing in any market and some specifically very good for Nepal.
A hope for the better future
The people who invest tend to have a better hope for the future. They have positive thoughts and plans for better days ahead. So, investing is more likely to increase positivity and give good hope for someone to look forward to in life.
A very few participation in the investments
Currently, less than 10% of Nepali are involved in the investments. This brings a very good opportunity for investors as the number of investors increases day by day, more growth in the market can be seen due to the high demands of the shares in the future.
When many people want to buy stocks/shares, the prices go up, and when more people are willing to sell, the prices go down.
Internet and word of mouth have helped a lot in spreading information about dematerializing the bank accounts and investing the money rather than saving up in the bank.
More than 55% of Americans own stocks. This means the market in the US is not going to have any steep rise. But, that’s not the case in Nepal.
Still, very few ones own shares in Nepal. The downside of which can be seen when the market is controlled by a few because of the lesser involvements. It is also known as the bullish trend.
But, as the involvement of more people in the market increases, not a small group of people can decide the fate of the market.
IPOs and Secondary Market
The most popular stocks to buy in Nepal are the IPOs in Nepal. People consider it very safe to purchase. Because, as soon as the Initial Public Offerings (IPOs) enter the secondary market for trading, the prices spike due to the high demands.
IPOs are also considered safe, because, you will be less likely to lose money when you purchase IPOs. But, the downside of it is, very few people can get the piece of cake. Well, not everyone gets the share that they apply for.
Mostly, the IPOs cost NPR. 100/share. Some of the other types (mutual funds) cost NPR. 10/share.
Currently, almost all of the shares costing NPR. 100 in the IPO costs over NPR. 450. And some well-performing mutual funds are at about NPR. 16.5/share.
Most of the shares had cost less than NPR. 200 just less than 5 months ago.
As you can see from the above graph, AKJCL as of March 29, 2021, had cost only NPR. 149/share. It costs over NPR. 400 as of now.
Despite the pandemic and political instability, NEPSE (the entire stock market) has done very well in the past year.
In the last year Aug 30, the NEPSE index was 1,462 however as of today Aug 30, 2021, it is 3,044
What to invest on?
I would highly recommend you to invest in Hydropower.
The current president of the United States has promised a green economy to the Americans and so many more green new deals are globally being made.
It definitely has also impacted how people have started to think about what things to invest in. The use of sustainable energy is not just increasing in the United States, but also is being rapidly incorporated by China, Japan, Australia, and many other countries all around the world.
Apart from the nations, big corporations such as Apple, Microsoft, Google, and more are as well taking steps to move towards a sustainable future.
We Nepali have a great resource to produce clean/green energy. The capacity to produce hydroelectricity is still considered as our one of the biggest strength.
Nepal has a production capacity of about 83,000MW. However, Nepal is currently producing only about 4,200MW (as of 2021). No, wonder why we have so many possibilities yet to unravel.
Here’s my portfolio:
As you can see, I have invested 91.3% in Hydro in various scripts. Almost all the stocks that I own, I’ve purchased from the secondary market. Because I’m not very lucky to have the IPOs allotted for me. And yet, I have made over 100% of profit so far on my investments.
Anyways, if you already have experience in investing in the international stock market you will get to see so very few scripts to trade-in here. I know. More IPOs are coming in. So, hopefully, we can have much more to buy stocks of several companies.
I would recommend you to start investing NOW if you haven’t already. Just ask some of your friends, they will tell you how to get started with setting up the accounts and more.
The last piece of advice that I would give you is, “Don’t Trade! Invest.” It is safe and less bothering.