Kathmandu: With the appointment of economist and former Finance Secretary Rameshore Khanal as Minister of Finance in the Sushila Karki–led government, share market investors appear optimistic.
Following the Gen Z protests of September 8–9 and the formation of the new election government, Khanal has been entrusted with leading the Finance Ministry.
Widely regarded as someone with a deep understanding of the economy, Khanal is also seen as highly knowledgeable about the capital market. He has clear insights into which policies are beneficial for the market and how different policies impact it. Because of this, investors in the capital market have welcomed his appointment with enthusiasm.
Tulsi Ram Dhakal, President of Nepal Investors Forum, said investors view Khanal positively.
“He understands the economy in depth. Even during his tenure in the High-Level Economic Reform Suggestion Commission, he studied the country’s economic problems thoroughly. If only the report prepared under his leadership were implemented, many issues could be resolved,” Dhakal said.
He added that implementing the commission’s recommendations would ease the economy and bring improvements that would also strengthen the capital market.
Previously, under the KP Oli government, Khanal had been appointed coordinator of the High-Level Economic Reform Suggestion Commission to identify problems in the economy and recommend solutions. The commission, under his leadership, submitted a report outlining both challenges and remedies.
Investor groups believe the report covers most of the major issues, and if the government proceeds in line with its recommendations, the economy will regain momentum. They argue that Khanal’s grasp of both macroeconomic policy and capital market dynamics makes him capable of steering the economy and markets in a positive direction.
Former President of Stock Brokers Association Bharat Ranabhat said, “Some people understand the economy but not the Finance Ministry. But Khanal understands both the economy and the capital market well. That’s why the market is taking him positively.” He added that while Khanal’s tenure may be short and the budget is already in place, fears of harmful policy moves have diminished.
Ranabhat also noted that Khanal is likely to work well with Nepal Rastra Bank Governor Bishwo Paudel, which could help foster coordination across regulatory agencies like NEPSE and SEBON.
Currently, banks and financial institutions have been providing large volumes of share mortgage loans, particularly to big institutional investors. Interest rates are low, and liquidity is abundant, but despite this, the stock market has struggled to gain momentum, hovering around the 2,600–2,700 index mark. Investors believe that having someone like Khanal at the Finance Ministry could restore confidence.
Ritu Jung GC, President of Small Investors Association Nepal, emphasized that the new minister should base long-term policy on the report prepared by his commission.
“He is the right person for our economy. He understands and has studied the capital market. If he frames long-term policies addressing instability and uncertainty in the market, it will be highly beneficial,” GC said.
He stressed the need to curb unhealthy practices in the market and build a capital market that investors can trust. Ending past practices of unnecessary leadership changes and policy instability, he said, would help restore a positive rhythm in the market.
Khanal-led commission’s report, submitted on 11 April 2025, contains detailed analysis of the current state of the capital market and steps the government must take. It highlights that while the capital market is a powerful tool for mobilizing investment as an alternative to bank financing, Nepal still lags in development.
The report notes that productive companies have yet to enter the market, derivative and commodity exchanges have not been introduced, and attempts to list real-sector companies have often been mired in controversy. It warns that some vested interests are exploiting retail investors and stresses the need to encourage big companies to issue shares and debentures to diversify risk and secure cheaper long-term financing.
It also calls for policies to attract foreign capital flows, particularly from Non-Resident Nepalis (NRNs), by facilitating their access to primary and secondary markets. Proper safeguards, it recommends, are needed to manage risks from sudden inflows and outflows of foreign capital.
Key recommendations for capital market reform include: Raise public awareness and promote investment through capital markets. Start secondary trading of government bonds. Allow NRNs to participate in the secondary market. Provide margin lending through securities firms. Strengthen SEBON’s autonomy and staffing to improve regulation and supervision. Require hydropower companies to issue IPOs only after starting production. Convert government enterprises into public limited companies and sell shares to the private sector. Issue bonds instead of relying on government borrowing to mobilize funds. Reduce transaction fees for large-volume trades. Restructure NEPSE, raise its capital, and bring private sector participation. Establish a commodity exchange and pass the Public Warehousing Act. Reduce costs and simplify processes for companies to issue shares and bonds. Introduce a transparent method for premium and book-building share issuance.
Investors believe that if these recommendations are implemented under Khanal’s leadership, Nepal’s capital market will become more mature and resilient.
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