Cambodia Launches First Bourse

Investors are betting on big gains at significant risk with the new exchange.
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Keat Chhon speaks to reporters at the launch of the CSX in Phnom Penh, April 18, 2012.
Keat Chhon speaks to reporters at the launch of the CSX in Phnom Penh, April 18, 2012.

After a three-year delay filled with missteps, Cambodia’s stock exchange officially launched Wednesday in what the country’s finance minister hailed as a “leap forward” for investment in the impoverished nation.

Deputy Prime Minister and Finance Minister Keat Chhon was on hand for the opening of the Cambodia Securities Exchange (CSX), the country’s first stock market.

“This is a historic day to mark the first launch of a Cambodian stock exchange. This is a leap forward for Cambodia’s finance sector,” Keat Chhon said.

The minister added that he expects the exchange to create an improved environment for business competition and generate revenue for investors.

The first, and only, company to register on the fledgling bourse is the Phnom Penh Water Supply Authority. It listed Wednesday with 13 million shares at 6,300 riel (U.S. $1.58) a piece, constituting around 15 percent of the company’s capital.

The company’s stock price jumped 50 percent in the exchange’s inaugural session.

Phnom Penh Water Supply Authority Director General  Ek Sun Chan said during the launch that Cambodia’s investment sector had improved dramatically since the 1970s when the economy was brought to a standstill by the murderous Khmer Rouge regime.

“More than 30 years after April 17 [when Phnom Penh fell to the Khmer Rouge], we have reached a historic event and succeeded in launching Cambodia’s stock market,” he said.

“This is a good opportunity for the people. Even those who only have a few hundred dollars can also invest in the country.”

Ek Sun Chan said that selling stock will create a system of checks and balances for the operation of his company.

“Any exploitation will be reduced and the government can collect more taxes,” he said.

During the launch, Keat Chhon invited more companies to sell their stock on the exchange.

“I encourage other companies that are qualified to register with Cambodia’s stock market to sell their stocks,” he said, adding that two more Initial Public Offerings (IPOs) would take place later this year for state-owned Telecom Cambodia and Sihanoukville Autonomous Port.

Several private companies had also shown interest in listing, he said, without elaborating.

Risk vs. reward

Brokers and investors are betting that the CSX, which is operated as a joint venture with Korea Exchange—Asia’s fourth-largest stock market operator—will lure more companies and regulate an opaque business climate which has kept Cambodia’s economy in the doldrums.

But some investors remain concerned about corruption, an unclear regulatory framework and the use of the riel currency for trading on the bourse.

Ninety percent of transactions in Cambodia’s banking system take place with dollars, but the central bank wants to be more independent in terms of its currency.

The lack of liquidity on the Cambodian market is also a risk in that investors may not be able to move large positions if they want to sell during times of instability.

Laos launched its own stock exchange last year—also operated jointly by the Korea Exchange—which saw two firms list with five set to join within three years.

Emerging market exchanges offer the opportunity to make big gains, but at the risk of high volatility for investors.

Vietnam opened its stock market to turbulence in 2000, leaving some shareholders bust.

Experts have suggested that Cambodia’s exchange may offer greater advantages for local investors, while foreigners may take a cautious early approach.

Reported by Keo Nimol for RFA’s Khmer service. Translated by Samean Yun. Written in English by Joshua Lipes.





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