Capitalising on the capital market

Capitalising on the capital market


Mr Ambika Prasad, one of the finer investment tycoons of Nepal, spoke to a packed hall of 150 audience members on Tuesday,  September 6, as part of Venture Talk, a monthly entrepreneurship talk series. The event, which was organised by Venture Corps, brings together top industrialists, businessman, and executives once a month at the Nepal Tourism Board, and has them share their expertise and business journey. Mr Prasad is the Director of Chandragiri Hills, MD of Hathaway Investment Limited and Chairman of Nepal Investment Forums. He has influenced today’s generation of investors with his in-depth knowledge about the share market and the nuggets of trading wisdom he dispenses are deeply appreciated by people from every field. At the most recent Venture Talk programme, Mr Prasad spoke about his investment journey, challenges that investors face, government apathy for the market, and the prospects for the share market. The talk was attended by industrialists, researchers, businessmen, students, investors, traders, and media personnel. Mr Prasad spent the first half sharing his story, whereas, in the  second, he attended to questions from the audience. The main takeaways from the event are paraphrased below:



How it all started

Mr Prasad informally started his journey through the capital market in 2050 BS, when he first bought Bank of Kathmandu’s shares with the pocket money given to him by his dad. Fueled by the prospect of his shares getting multiplied, he invested his savings in Himalayan Bank Limited’s IPO as well. He made some profit as his shares soared, and excited by the opportunities, he decided to stay in the share market for a good five years. But it wasn’t all smooth sailing. At one point, the market started dipping, and so did his shares; he remembers how during one low phase, he simply waited for the prices to rise rather than actively trading shares when he should have. As a result, he started incurring losses, and his interest in the market also faded, because of which he decided to drift away to a more stable profession – civil services. His share investments were dormant for a long period as he passively traded shares on the side while he continued working his 9-5 job. It was not until 10 years later that he decided to actively participate in the capital market again, and waiting that long to do so, according to him, was probably the biggest mistake of his life


Insights and tricks of the trade

Mr Prasad strongly advocates that no investor, small or big, should be complacent about their shares nor wait for the market to boom to gain profits. One must actively participate, by trading shares according to the market buildup, and not just be satisfied at having bought a few shares. The share market provides great opportunities to make money, and not employing the resources to do so is a bad idea. But he did warn against investing without forethought. As he bluntly put it, a market might slump in a matter of two years but a market boom takes, on average, five years. Because the recovery time is so long, one has to selectively research the market trends, observe the market cycle, and analyse the investment sectors to take advantage of bearish trends. The main reason most shareholders lose interest and opt out of the market has to do with their lack of willingness to invest time and effort in observing the market and to strategically trade shares accordingly. “If you only wish to park your excess liquidity securely, the share market is not the place for you. You should, instead, look into banks and financial institutions for that kind of safety,” he said. He stressed that the share market is about risks but that for the discerning investor, such risks should not be a deterrent. Other variables also come into play once you decide to enter the share market. For example, one has to treat the trades in the market professionally and pay attention to small detail in the market cycle and changes. If you want to perform well in the share market, you need to be able to thoroughly observe the market, predict trends and invest wisely. Once an investor gets the hang of these fundamentals, they will know how and when to sell their shares, and reap the benefits that the share market promises.


Impediments to market growth

Investors’ lack of knowledge about the share market and their foolhardy trades are the main reasons the share market isn’t performing well today. If we had investors who were extra careful about every trade, the market would have flourished. That said, the government is equally to blame: they impose needlessly stringent rules and policies in the share market; for new loan-funded investors, it is almost impossible to penetrate the market. Furthermore, the government has misjudged the importance of share market in the economy and has regarded the share market as a low priority compared to other economic sectors. The ratio for capital to risk-weighted assets has been risen so high for banks and financial institutions that it is almost impossible to borrow enough funds from banks to invest in the share market, compared to how a gold-centric fund would be easily provided. The increasing interest rates levied on share-centric loans has also created a barrier to entry for prospective stakeholders. The share market will only flourish once the government eases stock-market regulations and realises its importance in the primary market, and thus the overall growth of the economy.




The share market’s future

When Mr Prasad joined the share market many years ago, he was quite unsure about whether he could sustain himself solely by trading in the market. Now, 25 years later, he is anything but regretful about his decision and has successfully led many promising investment projects. As the chairman of the Nepali Investments Forum, he motivates new investors to believe in the share market—as it has immense potential for every investor who is willing to understand the nitty-gritty of the market. Despite the challenges the share market presents, if you can persevere, strategise properly and take your losses in stride, you can definitely do well in the market for long. It is also important to expand your market portfolio and carefully invest in various sectors if you want don’t want losses.


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