A billionaire and a ghost trading floor: Tale of Nepal's paralysis

Oct 08 2013, 13:37 IST
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Having started out selling noodles to India, then all over Asia, Binod Chaudhary's family-owned conglomerate includes a bank, a telecommunications business, resorts. Having started out selling noodles to India, then all over Asia, Binod Chaudhary's family-owned conglomerate includes a bank, a telecommunications business, resorts.
SummaryBinod Chaudhary, who made his name selling instant noodles, is valued by Forbes at a billion dollars.

governments barely in power long enough to fill posts, there has been little clarity on what type of economic system the country will follow.

"Every six months you have a new prime minister, a new government so how can people invest?" said the Finance Ministry's top economic advisor, Chiranjeevi Nepal. "Whether to follow the liberal, open economy or the mixed economy, that is the confusion here. Investment needs clear policies."

GHOSTLY EXCHANGE

Nowhere is that confusion more apparent than at the Nepal Stock Exchange. Located in a squat, brick building by a rubbish-strewn stream, the NEPSE feels a long way from Wall Street. Its hoarding is hand-painted, its electronic ticker blank since it broke five months ago.

Inside is an abandoned trading floor, frozen in time since the exchange replaced open-outcry trading in 2007. Rows of dust-covered computers remain, as do the prices from the last day of trading, scrawled on white boards used for pricing back then.

Nepal's stock exchange is state-owned and, since 2007, decision-making by the government has been slow. Without government permission, the exchange's employees cannot dispose of old equipment, or introduce new technology.

The NEPSE uses an electronic trading system but is one of the last in the world to settle trades manually, with brokers exchanging paper receipts and certificates at the end of trading.

"We sent a proposal to the government five years ago to privatise the exchange," said NEPSE Deputy Manager Shambhu Panta. "There has been no response ... There is no stable government. No decisions are taken."

The NEPSE's 50 registered brokers trade an average of $1.5 million a day, up from about $700,000 last year. This, said Panta, reflected Nepal's economic potential and hopes that the elections would bring stability.

The benchmark index touched a record 1,175 points in the election year of 2008 but bottomed out at 292 last year after the first constitutional assembly collapsed. It has since recovered to 541.

"When people think the politicians will agree on a constitution, the index rises," said Panta. "When the politicians fight, it falls."

On that basis, the market might be heading lower. No party is expected to emerge strong enough from the elections to resolve a fight over how much power to give local governments.

In a sign of the volatility leading up to the vote, gunmen on a motorcycle shot and wounded a candidate last week.

Billionaire Chaudhary worries that Maoist splinter groups threatening protests will clash with troops or scare off

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