What is Short Selling? Concept, Opportunities and Challenges in Nepal
Summary
Short selling, a trading strategy where investors profit from stock price declines, is not yet permitted on Nepal Stock Exchange. SEBON plans to introduce it to modernize the market, offering new opportunities and risks.
Key Points
- Short selling allows investors to profit from declining stock prices by borrowing and selling shares they do not own.
- Short selling is currently not permitted on the Nepal Stock Exchange but SEBON plans to introduce it to improve market efficiency.
- Opportunities of short selling in Nepal include better price discovery, hedging, increased liquidity, and attracting sophisticated capital.
- Challenges include infrastructure gaps, volatility risk, investor awareness, and need for strong regulatory frameworks before introduction.
