Dr Sam Ghanty of the FInancial Institute of Cambodia answers a few questions about the opening of the CSX.

Would you describe the CSX opening as a success?  Why? {jathumbnail}

Although the launching date has been postponed a couple of times in the past, I happened to believe that prudent and complete regulations must be in place to launch the CSX. This is not a game or show off ceremony, but serious business that all stakeholders must have confidence in.

Overall, I am pleased with the good work  by the SECC and the CSX staff to get the launching ceremony on target, given our resources (human and otherwise) we have available. I would like to sincerely congratulate all of them.

Has the stock performed how you thought it would?  Has it exceeded expectations?

The stock trading has performed as anticipated since most IPOs increased in prices for the after-period of launching. I think some speculators believe that PPWSA shares will rise more in the future for them to pay a premium. In most studies of IPO launching, IPOs tend to increase because of excitement of investors that have not been able to successfully participate in the book building process. They purchase additional shares to raise their share holding to a certain level they wish to own. This may be the averaging technique that works as follows:

Book building:

10,000 shares at KR 6,300 = KR 63,000,000

10,000 shares at KR 9,300 =    KR 93,000,000

Total holding: 20,000 shares for KR 156,000,000

Thus average price of:    KR 156,000,000/20,000 = KR 7,800 (not bad at all)

What roll-outs of other IPOs do you see coming on the horizon and when?

According to my conversation with some specialists, we should wait for IPO of Telecom Cambodia and Autonomous Port of Sihanoukville. This would leave out only two more state enterprises (Autonomous Port of Phnom Penh and EDC). I am not clear of the extent of private companies which have been working very hard with various underwriters such as Tong Yang, Campu, Cana, and OSK.

We should expect to see foreign companies in Cambodia move much faster than many local family-owned companies. Overall this remains to be seen.

Do you give good marks to the SECC and the CSX for their performance?  Why?

As a university professor I would give a grade of A (not A+) for both institutions. Their leaders and staff have devoted tremendous amount of time, personal pride and hard work to let yesterday opening happened.  

How important is it for the development of the CSX to add more IPOs?

Extremely important because PPWSA have cleared and cleaned all the mines that created hesitation and doubts for the reluctant companies. But the main cause is not yesterday but rather the readiness of the standby companies. By that I mean the conversion of past uncontrolled accounting in the internationally recognized standards, the willingness of divulging private information, the corporate governance culture, and most of the culture of separation of ownership from management.

Does the opening of the CSX usher in a new era that enables foreign individuals and companies to gain exposure to the Cambodian economy for the first time?  What’s the significance of that?

This is a two edged-sword: on one hand the participation of foreign investors is a blessing for Cambodia that needs so much an infusion of long-term capital for development, but on the other hand the threats of foreign short-term speculators (hit0and-run types) who only care to only reap profits and may cause short-term capital outflows that may distort the balance of payment and currency reserves of Cambodia. More studies are needed to evaluate this issue.

How does the development of Cambodia’s financial future look to you?  Challenges ahead?  Opportunities? 

In general, l would like to be more optimistic about the development of our financial sector that can attract a number of long-term investors, for domestic and overseas.

The main challenges are the ability of the regulators to maintain market confidence and reduce the asymmetry of information between the privilege and the general public. We must design a clear policy to encourage the Cambodian public to use the stock investment as a vehicle of long-term savings for their retirement or the education of their children in addition to the investment in real estate. We hope the SECC will live up to this challenge.