𝐒𝐭𝐨𝐜𝐤 𝐌𝐚𝐫𝐤𝐞𝐭 𝐄𝐱𝐩𝐞𝐫𝐢𝐞𝐧𝐜𝐞𝐬 𝐒𝐢𝐠𝐧𝐢𝐟𝐢𝐜𝐚𝐧𝐭 𝐕𝐨𝐥𝐚𝐭𝐢𝐥𝐢𝐭𝐲

As of October 2025, Bhutan’s capital market comprised 18 listed companies and 9 licensed brokerage firms under the Royal Securities Exchange of Bhutan Ltd. (RSEBL). The number of participants has remained largely stable over the past five years, with limited changes in listings and brokerage services.

According to the Royal Monetary Authority’s (RMA) 2025 annual report, trading activity over this period experienced notable volatility. In 2022, trading volumes more than doubled to 30.6 million shares, with values peaking at Nu 1,947.9 million. However, both volume and value moderated afterward, with trade value declining roughly 60% in 2023 before stabilizing at lower levels in 2024. Minor recoveries in volumes highlight fluctuating investor participation, while persistent declines in traded value point to challenges in market depth, liquidity, and limited diversification of listed instruments.

Market capitalization—a key indicator of market size—stood at Nu 54,860.4 million as of October 2025. From 2021 to 2024, Bhutan’s capital market consistently expanded, rising from Nu 49,291.6 million in 2021 to Nu 60,212.3 million in 2024, representing an average annual growth rate of 5.9%, before a slight decline in 2025. Growth in market capitalization is significant for economic development, enabling companies to raise long-term capital, diversifying investment opportunities, and reducing overreliance on banks. Yet, the market capitalization-to-GDP ratio has declined from 26.1% in 2020 to 22% in 2024, reflecting the capital market’s slower expansion relative to broader economic growth.

Structural constraints contribute to this trend, including limited new listings, low investor participation, a narrow product base, and insufficient capital mobilization. International benchmarks suggest that a market capitalization-to-GDP ratio below 50% indicates an underdeveloped market; Bhutan’s ratio below 30% highlights the need for broader participation, product innovation, and financial inclusion to strengthen the capital market’s role in economic development.

Established in 1993, the RSEBL was designed to mobilize domestic savings, improve access to finance, and support economic diversification beyond banking. In celebration of His Royal Highness The Gyalsey’s 4th Birth Anniversary, the RSEBL introduced the Bhutan Stock Index (BSI), an essential tool for tracking market trends, evaluating policy impacts, and guiding innovative instruments like index funds, ETFs, and derivatives. The BSI, with a base value of 1,000 as of December 31, 2019, reflects changes in stock prices, dividends, rights issues, buybacks, and listings. By October 2025, the BSI stood at 1,402.4 points, after reaching a record 1,571.9 in June 2024, signaling growing investor confidence.

Bhutan’s capital market remains narrow, dominated by equities and debt securities. The equity segment includes 18 listed companies with a combined market capitalization of Nu 54,860.4 million and paid-up share volume of Nu 13,404.7 million. Limited diversification increases exposure to firm-specific risks. On the debt side, new bond issuance totaled Nu 2,250 million, while commercial papers worth Nu 200 million were issued. Despite this, the market’s range of instruments is insufficient for a well-functioning, diversified system.

Bhutan’s financial system is largely bank-driven. As of December 2024, lending institutions provided Nu 236,933.5 million in credit, over 86% of GDP, highlighting reliance on banks for economic financing. Bank lending focuses on housing (29.8%), hotel and tourism (13.4%), and manufacturing (12.2%). In contrast, a vibrant capital market could provide long-term funding, diversify financial channels, and support infrastructure, innovation, and enterprise growth.

Climate and sustainability goals further underscore the need for capital market development. Bhutan’s Sustainable Financing Framework 2024 and Green Finance Taxonomy 2024 align investments with environmental priorities. The first National Adaptation Plan 2023 estimates USD 14,000 million in financing needs through 2038, while the second Nationally Determined Contributions 2021 outlines mitigation investments in transport, settlements, food security, and industry. Public resources alone are insufficient, making capital market instruments—sovereign and corporate green bonds, sustainability-linked bonds—critical to mobilizing domestic and international investors for Bhutan’s green transition.

Despite progress in dematerialization, corporate bond issuances, and digital trading platforms, challenges persist. Limited financial literacy, a shallow investor base, and minimal private sector engagement continue to constrain growth. Bhutan’s capital market remains closed to foreign investors, restricting participation and overall development.

Looking forward, strengthening market infrastructure, regulatory frameworks, and product diversification will be key to mobilizing domestic savings, reducing dependence on bank credit, and financing long-term sustainable investments. A resilient and inclusive capital market will support Bhutan’s goals of economic self-reliance, sustainable growth, and climate leadership while fostering broader financial sector development.

Tashi Namgyal
From Thimphu