When big companies shattered as the financial meltdown tsunami struck, their stock prices tumbled down. From the now proverbial Lehman Brothers to automobile don General Motors, that is what happened.
At one point during the recession, General Motor’s shares fell as low as $1.09, their lowest since April 1933.
But Bhutan has a unique reputation for ducking global trends.
Share prices slept in peace in the Bhutanese stock market during the recession, waking only once in a while to post an increase in value. Records suggest that even when Bhutanese companies showed signs of being hit by the recession, share prices confirmed a constantly upward movement here.
“The Bhutanese stock market is not hit by the economic meltdown,” said Dophu, general manger, Royal Securities Exchange of Bhutan Limited.
Tashi Group of companies, Bhutan’s leading private conglomerate, laid off some 120 employees in the past two months, almost a year after the Wall Street crisis emerged.
Some 40 employees of Bhutan Carbide and Chemicals Limited (BCCL) were laid off mainly because steel demand in India plummeted. Another 80 employees of the Druk Thuendrul Lerig construction (DTL) had to leave as the company planned to cut down costs.
“Steel prices in India, which was severely hit by recession has led to a discontinued demand of the raw materials, Calcium carbide and Silica Manganese,” said a BCCL official. BCCL dividends last year showed a decline by 5% but share prices continued to be traded at a high of Nu 900 a share. Two thousand shares worth 1.8 million were traded in August this year.
Records suggest that BCCL shares were sold at a consistent Nu 800 in 2008 and have increased by Nu 100 this year.
In 2008, BCCL earned a profit of Nu 45.677 million and contributed Nu 13.703 million as corporate income tax compared to a profit of about 21.3 million in 2007.
While most of the emerging economies of the world suffered the recession, the Bhutanese stock market never really stopped to grow.
India saw sharp fall in exports during the recession period but continued to grow at over six percent growth rate. This, according to reports is because of its large sized domestic market and the rapid response after the re-election of the Congress-led government into power.
What saved the Bhutanese stock market from free- falling into recession amid the global financial meltdown?
“Market realities have not yet sunk into the lazy Bhutanese investor. He is still a happy-go-lucky guy,” said a financial expert.
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