The Phnom Penh Post and the Securities and Exchange Commission of Cambodia (SECC) are jointly publishing a series of articles to create greater awareness of the role of the commission and the securities market in the Kingdom. This is the second in the series.
1. For investors
Diversification: Investors can trade in a wide range of financial instruments including equity securities (stock), debt securities (corporate bonds), collective investment schemes (CISs), contracts for difference (CFDs) of currency, precious metals, crude oil, CFDs on commodities (agricultural products) and the market index.
Return: Investors will receive investment returns in the form of capital gains, dividends and interest based on the financial products they invest in. Currently on the Cambodia Securities Exchange (CSX), there are six listed stocks and seven listed bonds available.
High liquidity: Liquidity refers to the easy conversion of investments into cash. Investors who buy stocks or bonds can sell their securities on the market at any time in order to receive cash when they need it.
Information sharing: All issuers must provide and present up-to-date information to the public and investors – such as periodic reports, information regarding the business and corporate governance, and financial statements – all supervised, recognised and approved by the securities regulator – the Securities and Exchange Commission of Cambodia (SECC) – and can be trusted.
Tax incentives: Investors will receive a 50 per cent reduction in withholding tax on interest and/or dividends, resulting in holding government bonds, equity and debt securities.
2. For issuers
Strengthening business operations: Through the securities market, issuers are able to raise capital over longer terms based on their needs. They can expand their business operations by improving productivity in terms of goods or services and/or acquiring other businesses and increasing competition in the market.
Reputation: Issuers will be familiar with the initial public offerings (IPOs) available because the SECC securities regulator only approves companies with a strong financial background and the necessary qualifications for listing. This results in the enhanced reputation, strength and corporate governance of the firm.
Exit strategy: Shareholders can sell 100 per cent of their shares on the market as required in order to exit the market and receive all their cash.
Attracting skilled staff: Issuers are generally strong companies in terms of financial soundness and corporate governance, and with a notable IPO they can then attract talented CEOs and other highly qualified personnel to join the firm.
Tax incentives: Issuers will receive a 50 per cent reduction in income tax during the tax incentives period.
3. The national economy
Spurring economic growth: Issuers can expand their businesses by raising capital through the securities market. This means projects can be implemented while enhancing productivity, which can lead to increased market capitalisation and boosted national economic growth as a whole.
Implementing government policies: Through the securities market, the government is able to implement policy, such as the privatisation of state-owned enterprises (SOEs).
Some of the SOEs to have been privatised include the Phnom Penh Water Supply Authority, Sihanoukville Autonomous Port and Phnom Penh Autonomous Port.
Job creation: When an issuer has raised capital for business expansion, this inevitably leads to the need for more staff. This plays a significant part in growing domestic employment as well as the economy as a whole.
Mobilisation of funds: Low-capital entities can also invest in the securities market, meaning their funds are mobilised for investment. Thus, these funds can be mobilised through the securities market for those who need it (the issuer). This allows cash flow to remain more active than by keeping money in one place or investing in non-productive assets such as gold or precious stones.
Prepared by: The Securities and Exchange Commission of Cambodia’s Department of Research, Training, Securities Market Development and International Relations.
E-mail: [email protected]
Phone: 023 885 611
Disclaimer: This article has been compiled solely for informative and educational purposes. It is not intended to offer any recommendations or as investment advice. The Securities and Exchange Commission of Cambodia is not liable for any losses or damages caused by using it in such a way.