Stocks’ reaction to the just-concluded local elections in Nepal can be described as ranging from nonchalant to downright depressing. The NEPSE, the country’s sole stock exchange, was already caught in a downward spiral after peaking at 3227 last August. The outcome of the election did not change the trend. In fact, between the day before the May 13 election and the publication of the results on May 27, the NEPSE fell 5.4 percent. From its high to the recent low, it tumbled 32.1 percent. Ordinarily, the stock market can be viewed as a voting machine. It is a way in which the collective wisdom of markets, comprised of both bulls and bears, pass judgement. Viewed this way, it has been a thumbs down.

The counterargument to this is that these are local elections. Major decisions impacting the stock market, or the investing environment in general, are made at the federal level, be it through the legislature or through cabinet decisions. With that said, of the 753 local seats contested, the Nepali Congress won 43.4 percent, with the Communist Party of Nepal (United Marxist-Leninist) a distant second at 27.2 percent. The Nepali Congress achieved this feat thanks primarily to an electoral alliance it was in along with the Communist Party of Nepal (Maoist Centre), Communist Party of Nepal (Unified Socialist) and Janata Samajbadi Party; the latter three respectively won 16.1 percent, 2.7 percent and 4 percent of the seats.

Independents fared well

The Nepali Congress is a centrist party with a centre-left policy on social issues, and a centre-right when it comes to the economy. The party is expected to vouch for a market-friendly approach. Given that the alliance did so well in the local elections, one would think the coalition partners would use this as a template in the federal and provincial polls in November this year. In this scenario, it is conceivable the coalition once again forms the government, raising the odds for market-friendly measures. But the apathy shown by investors can be interpreted as saying they do not think the coalition would survive by then. Or, they are saying the Nepali Congress had no chance of winning these many seats if it had gone to the polls alone.

Despite the adverse investor reaction, this was also an election that raised hopes for change. Nepal is a nation searching for direction. The Maoists were voted as the largest party in the first Constituent Assembly elections in 2008, followed by a humiliating defeat five years later when the Nepali Congress and the CPN-UML emerged as the two largest parties. In the 2017 general elections, Pushpa Kamal Dahal, Maoist chairman, was forced to tie up with the KP Oli-led UML. Subsequently, Oli tried to dissolve Parliament twice in December 2020 and May 2021, and was shown the door by the Supreme Court, which ordered the appointment of Nepali Congress leader Sher Bahadur Deuba as prime minister.

It is a young democracy. The current constitution, which came into effect in September 2015, introduced a three-tier federal system. Growing pains are aplenty. Corruption remains high. The rule of law gets tested often. Leaders of the major political parties themselves struggle to practice genuine democracy in-house. Voters, for the most part, are turned off. It is no wonder they are beginning to grope for alternatives. As a matter of fact, independents did very well in these elections, as they cashed in on the anti-incumbent sentiment. Three of the 11 sub-metropolitan (Dhangadhi, Dharan and Janakpurdham) and one of the six metropolitan mayorships (Kathmandu) went to independents.

‘Balen’ win not just a whim

The whole nation was keenly watching how things would turn out in Kathmandu. The excitement generated by the candidacy of Balendra Shah was like no other. He got 61,767 votes, versus 38,341 for Srijana Singh (Nepali Congress) and 38,117 for the UML’s Keshav Sthapit. "Balen", as he is fondly called, had the advantage of being a rapper and a structural engineer. The former helped him get the youth vote, while the latter helped him assure the average voter that he had the goods. Over the years, political shenanigans have left a bad taste in people’s mouths. Kathmanduites wanted a change. This is not the first time they have rebelled against the powers that be.

In the 1981 Rastriya Panchayat election, Nani Maiya Dahal, 37 at the time, was one of the two elected from Kathmandu. She was blunt, had no formal education, and cared for the oppressed. An anti-establishment wave won her nearly 66,000 votes, more than twice what Jog Mehar Shrestha, a seasoned politician, could muster. In 2017, in the mayoral election for Kathmandu, Bibeksheel Nepali Party’s Ranju Darshana, only 22, was thrown into the limelight, coming third with more than 23,000 votes; the UML’s Bidya Sundar Shakya was elected with nearly 65,000 votes. Such anti-establishment waves routinely take place globally as well, causing ripples of change for years and decades to come.

Born out of the 2011 anti-corruption movement in India, the Aam Aadmi Party was founded in 2012 by Arvind Kejriwal, Delhi’s current chief minister. The party portrays itself as an alternative to the Bharatiya Janata Party and the Indian National Congress, India’s two leading national parties. Besides Delhi, Aam Admi currently rules the state of Punjab. In France, where electoral alliances and coalition governments are normal, Emmanuel Macron came out of nowhere to win the French presidency in May 2017. He ran under the banner of En Marche!, renamed La Republique La Marche, a centrist and pro-European political movement he launched in 2016. He just won his second five-year term.

Balen has the potential to pull off a similar masterstroke. Nepal desperately needs to free itself from the shackles of dogmatic leaders in their 60s and 70s, who are driven by self-interests and have given their parties a bad name. The sooner Balen institutionalises his victory, the better. One way he achieves this is by giving his movement a name and forming a party. Winning the mayor’s election was one hurdle. Many more tests await him. One such is if he convinces the three independent sub-metro mayors to join his cause. If it turns out it is Balen who ends up shaking up Nepal’s political system, so be it. Any signs of political stability should gradually begin to draw positive reactions in the nascent stock market.