Blasts govt `negativity' toward investors Securities Board chief quits

Cheif of the regulatory body of Nepal's securities market Wednesday quit bemoaning the government's apathy toward the capital market.

Announcing his resignation at a press conference on Wednesday evening, Securities Board of Nepal (SEBON) Chairman Dr. Chiranjibi Nepal said the government looked at investors as gamblers and instead of taking steps to safeguard their investment, it was discouraging further investment.

"The stock market has been sliding for the last two months, but the government has not paid any attention," he said.

The Nepal Stock Exchange (NEPSE) Index which stood at 1004.28 points on Sept. 21, tumbled to 698.81 on Tuesday, its lowest point in a year and half. However before the announcement of the board chairman's resignation, the market rallied by 29.76 points on Wednesday. It had nosedived by 27.66 points on Tuesday.

"At a time when governments around the world are working to boost investor morale by cutting taxes on their investment in the capital market, the Nepali government hikes the capital gain tax," Dr. Nepal said.

The government raised the capital gain tax to 15 percent from 10 percent in its budget for the current fiscal year.

Dr. Nepal also cited a string of ‘rumours' which have circulated for over a month that the government had decided to impose a cap on rights issue spread and introduce a provision that would require investors to declare their sources of income. According to the rumour, the government would fix the base price for shares from rights issues at Rs. 100 and zero for bonus shares while calculating capital gain tax.

"Rumours that it would impose taxes on rights issues have sent shockwaves through market and spread panic among investors. But the government has not yet clarified whether there is any basis for the rumour," he said.

"When investor confidence is shaken and the market is falling, the Finance Minister should have asked SEBON about the development and discussed measures to boost investor confidence," Dr. Nepal said. "But, I was never called to talk on the issue by the new government although I was called twice on different occasions in the last three months."

He said Finance Minister Dr. Baburam Bhattarai had called the share market a ‘gambling ground' and this had also affected morale.

Calling the government's attitude towards investors ‘negative', he said efforts by a lone SEBON could not restore investor confidence.

Dr. Nepal warned that if the capital market crashed, it could take down many financial institutions with it. Many investors have invested in the share market by taking loans from financial institutions. "If they default due to their loss at the share market, the banks may also suffer heavily," he said.
Source:
Ekantipur