Logo of Phnom Penh Post newspaper Phnom Penh Post - Cambodian stock exchange pitches IPO potential

Cambodian stock exchange pitches IPO potential

Aun Porn Moniroth, the Minister of Economy and Finance, speaks yesterday in Phnom Penh during a public CSX conference about the benefits of listing as an alternative for accessing capital. Photo supplied
Aun Porn Moniroth, the Minister of Economy and Finance, speaks yesterday in Phnom Penh during a public CSX conference about the benefits of listing as an alternative for accessing capital. Photo supplied

Cambodian stock exchange pitches IPO potential

In an effort to stir confidence into the Kingdom’s sleepy bourse, which has seen two new companies list in the past seven months, the Cambodian Securities Exchange (CSX) held a day-long conference to educate companies about the benefits of listing as an alternative for accessing capital.

Speaking yesterday, Hong Sok Hour, chief executive of the CSX, admitted that while many companies don’t understand how the stock exchange works, it still offers a “highly efficient way to mobilise capital based on Cambodia’s current economy”.

“Companies can’t maximise growth by relying on their own capital or debts from bank [lending],” he said.

Finance Minister Aun Pornmoniroth urged the CSX to provide info about the challenges of the initial public offering (IPO) process so that companies could better prepare to list.

He said that trading has remained lackluster despite the government’s attempts to encourage companies to list by developing a Growth Board that targets small- and mid-sized firms and through issuing prakas that give a tax break for companies up to 50 per cent for three years.

“I hope that this conference will become crucial in making companies active so that they can see the long-term gains, strengthen the reputation and have more trust in the market,” he said.

Sou Socheat, director-general of Securities and Exchange Commission of Cambodia (SECC), explained that while the conference was aimed partially at boosting trading, it should promote the benefits of an IPO as the main selling point.

Phnom Penh SEZ, which became the fourth company to list last Monday, successfully raised $8.2 million in its IPO, while the Phnom Penh Autonomous Port (PPAP) raised $5.2 million last December. Neither company debuted to high levels of trading.

Han Kyung Tae, managing director of Yuanta Securities (Cambodia), the underwriter for PPAP, said that unlike developed stock markets that see high levels of trading and are vulnerable to economic shocks, the Cambodian market should be viewed as an IPO market that provides funding for smaller companies looking to expand.

“One of the frequent questions and concerns that I get is about the low level of market liquidity. But in my observation, low market liquidity doesn’t bother long-term investors or long-term shareholders,” he said. “IPO is all about raising equity money rather than borrowing money.”

Fong Nee Wai, chief financial officer of Phnom Penh SEZ, who compared the Thai stock market to the CSX, countered that until Cambodia builds up its own core of domestic investors, liquidity would continue to remain low.

“When you do not have large numbers of local investors inside the system, of course the foreign investors will not come,” he said.

“I believe liquidity builds liquidity. Ultimately, there has to be more individual investors in the market. Cambodia should use the Philippines stock market as an example, where 50 per cent is local investors and the rest are foreign.”

Taiwanese-owned garment manufacturer TY Fashion (Cambodia) is the only other company that has officially shown interest in listing. However, a date has not been confirmed for the IPO.

MOST VIEWED

  • PM: West unfair to Cambodia

    Prime Minister Hun Sen released a message celebrating the International Day of Peace on Monday, saying that some major powers and western countries had been systemically cooperating to put political pressure on Cambodia as they did in the 1970s and 1980s. Hun Sen said pressuring

  • ‘Bad news is an investor’s best friend’ – unlocking investment potential in Cambodia

    It is time to shop. Economic woes provide good pickings for investors if they know where to look The poem If, written by English Nobel laureate poet and novelist Rudyard Kipling for his son circa 1895, is widely perceived as fatherly advice for John who would

  • First ‘mobile kitchen’ in Cambodia enters service

    A catering company recently rolled out Cambodia’s first “mobile kitchen” – a $50,000 container capable of serving up to 200 people at a time. The kitchen is the brainchild of Seng Hok Heng Catering Services. At 4.4m-high, 6.8m-long and 2.4m-wide (expandable to 6.8m), the kitchen is equipped

  • Kingdom, China rebut basis for US sanctions

    The Council for the Development of Cambodia, the Ministry of Foreign Affairs and International Cooperation, and Tianjin Union Investment Development Group Co Ltd (Tianjin) have responded to US sanctions on Union Development Group Co Ltd (UDG), a Chinese-owned company currently developing the sprawling $3.8 billion Dara

  • PM requests Russia’s Covid vaccine

    Prime Minister Hun Sen has requested that Russia provide Cambodia with its Covid-19 vaccine after the former announced it planned on mass vaccinating its population next month. The request came on Thursday through the prime minister’s Facebook page as he met with Anatoly Borovik,

  • Influenza breaks out in eight provinces

    Nearly 600 people have been infected with influenza in eight provinces in the past month, Ministry of Health spokesperson Or Vandine said. The ministry is advising extreme caution. A report released by Vandine on Saturday said the Ministry of Health observed transmissions of influenza between August 15