The stock market in the country has been receiving increasing interest from the public. The recent sale of shares under the Sungchob Fund and Kidu Fund also played a huge role in this. Despite the pandemic, the Bhutanese stock market has remained unaffected.
A Stock Market, in simple terms, is a place where shares of public listed companies are traded. Thus, it is the meeting place of buyers and sellers of shares.
A share is a unit of ownership of a company. So, when one buys a public company’s share, he/she is buying a piece of that company.
The Royal Securities Exchange of Bhutan Limited (RSEBL) is the only stock market in the country. And there are currently 19 listed companies under the RSEBL.
According to Dorji Phuntsho, the CEO of the RSEBL, there are two ways for a company to expand. “One is to borrow from the financial institutions or the second option to raise funds from the public. If the company wishes to raise funds from the public, the term is called IPO, Initial Public Offering”.
Investors purchase those shares through the Initial Public Offering (IPO), which allows the company to raise money to grow its business.
Dorji Phuntsho says an investor has the option to invest in one’s own business or in other classes of assets.
“Compared to other classes of assets, if you are investing in a listed company, you can track the proven track records of these companies, number one. Number two, now in terms of reward, since you have invested in the ownership of that company, you are entitled to profit in the form of a dividend,” he said.
There are also other benefits of investing in shares. One such benefit is that the shares are highly liquid, meaning they can be easily converted to cash. Moreover, one can buy or sell shares in portions, unlike other assets.
One common misconception about buying shares is that one needs a lot of money to start investing in stocks. That is not true. There are shares that cost as low as Nu 17 per share. However, he also said there also are risks associated with investing in shares.
“Like any business, you are investing in, if the business is not performing well, the risk is that you have to forgo your equity. If the company goes for liquidation, then after paying all the liabilities as an owner you will be the last one to be remunerated,” said Dorji Phuntsho.
A stock’s price is dependent on its environment, which includes the public’s perception of the company, its industry, the general economy, and the political climate. Hence, it is essential for one to have the basic knowledge of how a stock market works before investing.
Yeshi Dorji
Edited by Yeshi Gyaltshen
