10 Shares and a Dream: How Nepal Turned IPOs into a Market Lottery
Summary
Nepal's IPO market operates like a lottery with investors receiving minimal shares, leading to illiquidity and price distortions rather than genuine investing.
Key Points
- Nepal's IPO allotments are decided mainly through a lottery system with retail investors often receiving only 10 shares, creating illiquid ownership.
- Trading of newly listed stocks is concentrated among technologically advanced traders due to layered lock-ins on promoters, employees, and others, resulting in price manipulation.
- Positive price circuits in IPO stocks are often caused by manufactured scarcity, not genuine market strength, leading to instability once early accumulators exit.
- Nepal's IPO market structure fragments ownership excessively and lacks liquidity-aware regulation, causing market inefficiency and risks to investor protection.
