Business Environment

Score 95/100

Why are general people of Nepal attracted towards buying shares of financial

institutions? What can be done towards generating same kind of enthusiasm in

other sectors?

In the crisis's situation which Nepal is Facing the only sector which seems to be booming

up are the financial sectors such as banks , finance company or other financial

institutions. The basic reasons which have made this happen seems to be as follows.

Transparency of system: Financial sectors are one of the sector which has a

transparency of its annual accountancy report and its annual procedures and policies.

This hence tends to make this sector more attractive than other private sectors which do

not have transparency with its plans and policies, with the public which are mainly the

buyers of shares.

Professionalism: Financial institutions are one of the dynamic organization which follow

high ethical values and professionalism which develops more confidence within the

stake holders and hence people are ore interested in purchasing and selling of Financial

institutions shares

Profitable sector in the crisis situation: Despite of huge crisis within last 10 years in

the country the only sector which has a relief seems to be the financial institutions As it

provides more profits in terms of Dividends and share value incensement. That is why

people are interested in buying more of financial institutions shares

Lack of good policy in private sector: One of the reason people do not invest in

private sector and do invest on financial sector are lack of good policy within the private

sector. It tends to be felt that good private company are owned by the sole owners and

they are not interested rights to the public neither they want to share their profit to the

local share holders.

Insufficient Investing Opportunities: Another reason why people more over invest in

the financial institutions are that there are very less opportunities for the investors in

other sector. There are very few private companies listed in the market besides the

financial institutions.

Governing Body: There is a governing body over financial institutions that is NRB which

helps the share holders in difficult crisis where as there is no governing body over

private institutions which does not boost the share holders to invest in Private sectors

Few private company listed in NEPSE: Another reason which makes does not make

people invest in private companies are that there are very few Private companies As 75

% of companies are banks and other financial institutions listed in the share market.

Bulls run trend in the market: There is currently bulls run trend in the market as people

invest in the shares without any systematic reasons. They simply follow the trend which

market is having or the bigger market players adopt. Hence the trend of the current

market is to invest in the financial sectors that are why the majority of shares holders

invest in the shares of financial institutions.

To develop some enthusiasm in other sectors following things can be done.

Corporate governance :Develop some good corporate governance so that people feel

safe and less risky to invest in the private sectors . It will also make the companies feel

safe to list their companies in the share market.

Develop transparency and professionalism: The private companies should develop

transparency and professionalism within the company so that they can gain the

confidence of the public who are willing to make their investment in the companies.

Introduce Ethical practices: The company should ethical practices within their policy

and have good market value in terms of good will and hence people will start purchasing

the shares of private companies

Develop better policies to involve private companies in stock market : There

should be good and safety policies so that more private companies get involved in the

market which will also help tn boosting the confidence of the investors to invest in the

companies .

 

Feedback:

A very good write-up. Keep it up.