Bear sentiments dominate the stock market

The Bhutan Stock Index (BSI) in 2021, slowly picked up from 936.17 points on 1 January 2021 to its peak of 1038.84 in 27 September 2021 to a gradual decline of 992.48 points as of 6 January 2022.

The last few months has seen a sell off in the BSI led mainly by financial institutions stocks partly on the account of dividends not likely to be declared and also Omicron worries. Other companies have also been hit.

The mood in the stock market is more to sell than buy and stock prices of several companies have been falling which could reflect larger fears over the economy. BIL is selling at Nu 60 per share down from the highs of Nu 65 plus, RICBL is down to 71 from the highs of 74 and 75, GIC Bhutan is at 29.30, BNB is at 31.16 down from the highs of 34 and 35, T-Bank IS AT 43.90 and Druk PNB is at 66.65.

In manufacturing shares in BBPL, BFAL, Bhutan Polymers, DFAL, Penden Cement are all down.

“Except during the pandemic, these are normal price fluctuations, and the reason cannot be ascertained. Any reasoning will just be speculation since BSI is linked with market capitalization and is dictated by prices of shares in the market, which depends on the interaction between buyers and the sellers in the secondary market,” said Sonam Phuntsho Lhagyel from the Policy Division of RSEB.

Sonam added that there can be multiple reasons for the price fluctuation of stocks, but it all comes down to individual’s decision, as well as the laws of demand and supply of shares in the market.

The price of shares equates to how well a company is performing in the market. The higher prices mean people put their trust and confidence in the ability of company to make profit, and therefore, more people are willing to buy the shares. The lower prices could mean there are fewer buyers.

There is a limit to setting the price of a share by the seller called circuit breaker; a seller cannot sell shares below or above 5 percent of market price. 

The BSI was recorded at 1000.29 points at the beginning of 2020, and gradually fell to the lowest at 904.17 in May 2020 after the impact of the pandemic which triggered a major sell off.

Though the index showed improvement from its lowest point, the market closed with a slump at 938.08 in December 2020.

 An issue the RSEBL is current facing is unclaimed dividends.

RSEB recently issued a notice to request shareholders of GIC Bhutan Reinsurance Company Ltd. (GBRL) and unlisted companies to contact the office regarding the unclaimed dividends and process the claim.

A delisted company means that the shares of the company are converted into cash and distributed among the shareholders according to the number of shares, and now the company no longer exists or cannot trade shares. 

RSEB delisted Druk Plaster & Chemicals Ltd. on 7 February 2020 and S.D. Eastern Bhutan Coal Company Ltd. on 19 March 2020 with approval accorded from the listing committee.

Jigme Mining Corporation Ltd. was suspended in adherence to section 2.23 (4) of the Rules Governing the Official Listing of Securities on 4 May 2020 with the company opting for voluntary winding-up upon expiry of mining lease.

Further, the suspension of Bhutan Ferro Alloys Ltd. and Bhutan Carbide and Chemicals Ltd. was lifted on 3 March 2020, as per the approval accorded by the Royal Monetary Authority (RMA).

In the month of December 2021, the top 5 traded companies were RICB, BNBL, SVL, BIL and DPNB.

There are currently 19 companies listed under the Royal Securities Exchange of Bhutan (RSEB), which is the only stock market in the country. 4 companies were delisted from RSEB in 2020.

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