Share trading in the secondary market has increased by about 300 percent in the first five months this year, compared with the same period in 2017.
Market capitalisation has touched a record high of Nu 28B, an increase of about Nu 3B compared with 2017. Market capitalisation is the total value of shares at the prevailing market price.
Records from the Royal Securities Exchange of Bhutan (RSEB) show that as of May this year, shares worth Nu 125M was traded in the secondary market.
Share market has two components including the primary market where the initial public offering (IPO) takes place and the secondary market where existing shares are traded. When the existing shares are traded in the market, the price at which the transaction takes place becomes the new market price of a share.
For instance, the face value of Druk PNB share is Nu 10 per share but the current market price is Nu 26.
To improve the country’s capital market or enhance market capitalisation, either the size of the share or the price should go up.
“The improvement in the secondary market could be due to change in the trading process from continuous to call market, which discouraged the negotiated trade as practiced earlier,” the chief executive officer of RSEB, Dorji Phuntsho said. “We are also speculating that it could be due to increase in literacy programme the RSEB conducted.”
The stock exchange developed an online platform last year, where buyers of shares can place an order with a preferred price and sellers can quote the price. The whole process is visible in the RSEB website at real time and such transaction leads to discovering new market price of shares of individual companies.
“This change in trading process has shortened the transaction time drastically,” an official from the RSEB said. “This platform puts both the buyer and seller in a comfort zone as there is transparency,” he said.
RSEB is also planning to bring in more agents in other dzongkhags. “We have provided the platform, now it is also the work of the brokers to take it forward,” the CEO said.
The stock exchange has also initiated walk-in sessions every Friday to educate people on basics of share trade. About 500 individuals have attended the session so far.
With Nu 28B in shares and another Nu 10B in debt instruments like bond, the capital market is about Nu 38B, which is almost 30 percent of the assets of the financial institutions.