Nepal’s 2025 Market Reset: 30% Public Ownership in NTC, NEPSE Restructuring, and the Impact on the NEPSE Index
Brief Summary
In 2025, the Government of Nepal is reducing state dominance in Nepal Telecom by raising public ownership to 30% while fundamentally restructuring NEPSE into a more commercially driven entity—reforms that could reshape liquidity, governance, and long-term performance of the NEPSE index.
Potential Impact on the NEPSE Index
The planned divestment of Nepal Telecom (NTC) shares and the restructuring of the Nepal Stock Exchange (NEPSE) are likely to influence the NEPSE index through both short-term market dynamics and long-term structural change.
1. Impact of NTC Stake Divestment on the Index
Nepal Telecom is one of the largest constituents of the NEPSE index by market capitalization, making changes to its ownership structure particularly influential.
Short-term impact
- The sale of an additional 21–22% stake may introduce temporary supply pressure.
- Market uncertainty around pricing and allocation could lead to short-term volatility in NTC shares.
- Due to NTC’s index weight, price fluctuations may have a visible impact on the overall index.
Medium- to long-term impact
- Higher public shareholding increases free float and improves trading liquidity.
- Broader ownership enhances governance discipline and accountability.
- Operational efficiency and competitiveness could improve as market scrutiny increases, supporting valuation stability.
While near-term pressure is possible, the structural impact is likely supportive over time.
2. Impact of NEPSE Restructuring on the Market
NEPSE is not planning an IPO, but it is undergoing a significant ownership and governance restructuring.
Key implications
- Reduction of direct government control is expected to improve decision-making speed and operational efficiency.
- Entry of a foreign strategic partner can accelerate technological upgrades and adoption of global best practices.
- A more commercially oriented exchange can introduce better products, systems, and market discipline.
These changes strengthen the underlying market infrastructure, indirectly benefiting all index constituents.
3. Sentiment and Capital Market Depth
Together, the NTC divestment and NEPSE restructuring send a clear signal:
- capital markets will play a larger role in Nepal’s economic growth,
- state-owned enterprises will face higher accountability,
- and investor participation is expected to deepen.
This narrative shift can:
- attract long-term domestic and institutional capital,
- improve overall market confidence,
- and support a gradual re-rating of the NEPSE index.
Bottom Line
- Short term: Possible volatility from increased NTC share supply.
- Medium term: Improved liquidity and governance across the market.
- Long term: A deeper, more resilient NEPSE supported by stronger institutions and infrastructure.
If executed transparently, these reforms could mark 2025 as a structural inflection point for Nepal’s capital markets.