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Unscientific Capitalization Calculation: Misleading the Market, Seven-Point Suggestions to the Finance Minister

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NEPSE trading

Unscientific Capitalization Calculation: Misleading the Market, Seven-Point Suggestions to the Finance Minister

Concerns have been raised about the misleading messages being spread in the market due to impractical capitalization calculations. On Sunday, a delegation comprising Member of Parliament Hari Dhakal, along with representatives from brokers, merchant capital, and investors, submitted a seven-point suggestion to the Finance Minister, drawing serious attention to the issue.

According to MP Dhakal, the inconsistent method of market capitalization has caused a significant shock in the market, negatively impacting investor sentiment. He emphasized that the government should remove unscientific methods and adopt scientific ones to make the market free and natural.

Key Suggestions:

  1. Scientific Capitalization Calculation: Adjust the market capitalization to be factual and scientific, as the unscientific methods currently used have sent misleading messages.

  2. Bank Investments: Allow banks and financial institutions to invest (buy and sell) up to 2% of their primary capital in publicly listed companies on a short-term basis.

  3. Risk Weight of Collateral Loans: Reduce the risk weight of all types of share collateral loans to 100%.

  4. Appointment of Chairman of the Securities Board: Immediately appoint a chairman for the Securities Board.

  5. Halt Issuance by Financially Weak Companies: Stop the primary and rights issuance of companies in poor financial condition.

  6. Enhance Technical Capacity: Expand the technical capacity of institutions licensed by the Securities Board (such as stock exchanges, brokers, and merchant bankers).

  7. Market Regulation: The Securities Board and Nepal Stock Exchange should enhance regulation to maintain transparency among listed companies and prevent undesirable activities in the market.

Representation from Brokers, Merchant Capital, and Investors:

  • Representing the brokers: Priyaraj Regmi and Durga Tiwari.

  • Representing merchant capital: Sachin Silwal.

  • Representing investors: Tulsi Ram Dhakal, President of the Nepal Investors Forum, and Gopal Swami.

These suggestions aim to contribute significantly to maintaining market stability and credibility.

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