For the past couple of weeks,I have been helping an impact investing fund to write its investment prospectus.I have been doing quit a lot of research on the potential of Nepali bottom of the pyramid market particularly in the sectors like internet connectivity,healthcare,water and sanitation, culture ,education and education .......
Despite lot of potential,current market is very fragmented and due to the difficultly of geographic terrains, managing distributions channels is challenging .... It is inevitable for both domestic and international investors to be successfully in Nepal without addressing the hurdles like achieving economies of scale, weak distributions channels,consistent quality of the product and weak infrastructure like roads,energy,internet .... to add to that very idea of entrepreneurship means converting problems into opportunity, at the same time making money....... ........................
so one of the requirement to make the investment decision is to gauge the overall risk associate to investment in economy like Nepal ........ to learn more about the investment decision and current economic risk in Nepal ... I emailed one of my friend ( a man with super economic and financial analysis skills) -- he replied me by writing an oped in the Kathmandu Post : )
" A friend of mine recently sent me an email asking whether I had or knew the data on the “Country Risk Premium” (hereinafter CRP) for Nepal. He was working on an investment prospectus, and needed, among others, information on the CRP—a premium that foreign investors associate with a particular country when making their investment decisions. While I did not have any such information at that time, given the importance that foreign investors assign to such risk premium, I went to the internet and started looking around if there were any such data pertaining to Nepal.
The concept of a CRP refers to an increment in interest rates that would have to be paid for loans and investment projects in a particular country compared to some standard. One way of establishing the CRP for a country is to compare the interest rate that the market establishes for a standard security in the country, say the central government debt, to a comparable (same maturity and issued in the same currency, say US dollars) security in the benchmark country, say the US. The interest rate that is relevant is the market-determined yield to maturity rather than the coupon interest rate. Given that Nepal and other developing economies don’t issue foreign currency denominated bonds, it is difficult to calculate the CRP using this method for such countries. " click here to read
Despite lot of potential,current market is very fragmented and due to the difficultly of geographic terrains, managing distributions channels is challenging .... It is inevitable for both domestic and international investors to be successfully in Nepal without addressing the hurdles like achieving economies of scale, weak distributions channels,consistent quality of the product and weak infrastructure like roads,energy,internet .... to add to that very idea of entrepreneurship means converting problems into opportunity, at the same time making money....... ........................
so one of the requirement to make the investment decision is to gauge the overall risk associate to investment in economy like Nepal ........ to learn more about the investment decision and current economic risk in Nepal ... I emailed one of my friend ( a man with super economic and financial analysis skills) -- he replied me by writing an oped in the Kathmandu Post : )
" A friend of mine recently sent me an email asking whether I had or knew the data on the “Country Risk Premium” (hereinafter CRP) for Nepal. He was working on an investment prospectus, and needed, among others, information on the CRP—a premium that foreign investors associate with a particular country when making their investment decisions. While I did not have any such information at that time, given the importance that foreign investors assign to such risk premium, I went to the internet and started looking around if there were any such data pertaining to Nepal.
The concept of a CRP refers to an increment in interest rates that would have to be paid for loans and investment projects in a particular country compared to some standard. One way of establishing the CRP for a country is to compare the interest rate that the market establishes for a standard security in the country, say the central government debt, to a comparable (same maturity and issued in the same currency, say US dollars) security in the benchmark country, say the US. The interest rate that is relevant is the market-determined yield to maturity rather than the coupon interest rate. Given that Nepal and other developing economies don’t issue foreign currency denominated bonds, it is difficult to calculate the CRP using this method for such countries. " click here to read
