..M-cap at Nu 53B

Thukten Zangpo

After share prices peaked in the secondary market in April this year, the prices slowly dipped from May.

Bhutan Stock Index (BSI) settled at 1,074.87 yesterday from 1,118 on April 29 this year, according to the Royal Securities Exchange of Bhutan (RSEB).

The BSI measures the stock market’s performance and serves as a benchmark for investors measuring the performance of their own investment portfolio.

It was set at 1,000 as the baseline on December 31, 2019. Gains above or drops below the baseline indicate the price change.

Consequently, the market capitalisation (M-Cap), which is the value of shares at the current market price, hit Nu 55 billion (B) in April this year. As of yesterday, M-Cap was Nu 53B.

M-Cap is the value of shares at the prevailing market price of the 19 companies listed with the RSEB. It is derived by multiplying the number of existing shares by current market prices, meaning that an increase in the number of the prices of stock will contribute to M-Cap.

A broker said that market prices usually go up during the first quarter of every year when the companies declare dividends, bonus shares, and issue rights.

A rights issue is an issue of shares offered at a special price by a company to the shareholders in proportion to their holding of old shares.

However, this time and last year, he said the company’s annual general meetings were postponed because of the pandemic. In these meetings, the companies decide to give dividends, bonus shares, and issue rights.

“The market prices would be steady in the next one to two months,” a broker said.

The stock market reflects the sentiments of the investors and the prices of securities in the market depend on the behaviour of investors. People trade either by looking at the company’s performance or when they have money at hand to invest.

Manufacturing sectors did well in gaining share prices. Of the 19 listed companies on the stock exchange, five companies declared dividends for the income year 2021.

Druk Wang Alloys Limited (DWAL) declared a dividend of 35 percent and Bhutan Ferro Alloys Limited (BFAL) declared a 300 percent dividend on February 24.

DWAL’s per share prices increased from Nu 84 in April 2020 to Nu 161 in April this year to Nu 202 in July. BFAL’s price declined to Nu 83 in April this year.

The Druk Ferro Alloys Limited also declared an interim dividend of 30 percent last June. Its share prices rose from Nu 102 in January this year, touching Nu 192 in May and Nu 160 as of yesterday.

The State Trading Corporation of Bhutan Limited (STCBL), and Bhutan Carbide and Chemicals Limited (BCCL) declared a dividend of 25 percent and 110 percent in May and April this year, respectively.

The share prices of the financial sectors saw a steady level since the central bank froze dividends from the financial institutions in the last few years.

Observers say that despite the pandemic, the companies dealing with the export of ferrosilicon did well. However, the increasing price of raw materials, inadequate supply of laborers, and competitive markets in India could be among the challenges.

Bhutan exported ferrosilicon worth Nu 15.28B in 2021.

This month’s top gainers were STCBL with 2.5 points up at Nu 63 per share, followed by Bhutan Insurance Limited (BIL) with 1.97 points at Nu 67 per share, and GIC Bhutan Reinsurance corporation Limited saw a 0.65 percent gained at Nu 27.5 per share.

However, BFAL saw 30 points down at Nu 83.73 per share, BCCL’s share prices dropped by 11 points at Nu 34.09 per share, DFAL by 5 points down at Nu 160 per share, DWAL’s share price fell by 2.52 points at Nu 190 per share, and Penden Cement Authority Limited with 2 points down at Nu 98 per share.

Five top-traded companies in July this year are Bhutan National Bank Limited, Royal Insurance Corporation of Bhutan, Sherza Ventures Limited, BIL, and Druk Punjab Bank limited.

A total of 353 investors traded 962,168 shares of 16 companies worth Nu 41.5 million in July.