Cambodia and SKorea signed a joint-venture agreement for the Kingdom’s first exchange, but no launch date was set

BLOOMBERG

Share prices are displayed at the Korea Exchange (KRX) in Seoul. KRX on Monday signed an agreement with the government of Cambodia to establish its first exchange, a project that is expected to be set up by December at the earliest.

THE Cambodian government and the Korea Exchange (KRX) signed their long-awaited agreement to set up Cambodia's first stock market on Monday, in what authorities called a "historic event".

The signing ceremony was originally slated for February 19, but the KRX chairman was unable to attend, citing health problems.

"The agreement reached today is another step forward in building necessary infrastructure ... for the smooth operation of the market," said Aun Porn Moniroth, secretary of state of the Ministry of Economy and Finance.

Authorities say the exchange will start small, with up to five companies listed.

But even with the contract signed, National Bank of Cambodia Governor Chea Chanto said authorities have no fixed date for the stock exchange launch. The launch was originally set for September, 2009, but the global economic slowdown led authorities to delay until December.

With the economic situation worsening, Finance Minister Keat Chhon said even that date could be in question.

"We cannot say for sure that the launch date will be December. We are working according to our plan," he said at the ceremony.

We cannot say for sure that the launch date will be in

december.

He said that the government is "following a clear roadmap" on the exchange and that the launch date depends on the progress of publicity, training and infrastructure.

Despite the slow economy and the unclear launch date, business leaders said they were enthusiastic about the planned market launch.

"The stock exchange is a very important thing [for the business community] because it will make companies more transparent," said Douglas Clayton, managing partner for Leopard Capital, an investment fund in Phnom Penh.He said that the timing of the stock exchange launch is not the most pressing issue facing the exchange. "It doesn't matter so much when the exchange opens - it will take a few years for the market to gain traction," he said.  

John Brinsden, vice chairman of ACLEDA Bank, said business leaders are pleased the exchange is moving forward, but that the government needs to clarify the rules governing securities.

"I think the exchange will go ahead - I don't see the global economic situation ... affecting the launch. The Ho Chi Minh City exchange started small," he said.

The agreement gives the Ministry of Finance 55 percent of shares and the remaining 45 percent will be in the hands of KRX.

Korean Exchange CEO Jung Hwan Lee said the exchange could be an important step forward for the Cambodian economy.

"The securities market was one of the key factors behind Korea's prompt recovery from the Asian financial crisis," he said.