Companies listed on the Cambodia Securities Exchange (CSX) should consider providing higher dividends to shareholders to boost trading activity in the Kingdom, experts at a gathering said on Wednesday.
Speaking at a forum for listed firms on the topic “Potential of Sustainable Growth”, SBI Royal Securities managing director Seng Chan Thoeun said there are several factors causing a lack of liquidity on the CSX. Cash dividends, he said, could attract more investors to the market.
While no exact rate was given, Thoeun said the dividend per share should be equal to or higher than interest rates for deposits at financial institutions. In the Kingdom interest rates for riel deposits currently stand at around seven per cent.
“Companies themselves can help to boost market liquidity. Give more returns [dividend] to others and investors will come,” he said.
There are currently five companies listed on the Kingdom’s fledgeling bourse. Two of them, Phnom Penh Autonomous Port (PPAP) and Sihanoukville Autonomous Port (PAS) have promised private shareholders a five per cent dividend annually for five years and three years respectively.
Chey Sokunthea, marketing director of PAS, which paid out dividends of 7.9 per cent last year, said there is a positive relation between dividend sharing and stock price. She observed that when the company declared it would offer higher dividends, the stock price increased.
“When we get more profit, we will distribute dividends at a higher rate. We also want to attract investors.”
Ros Kimleang, deputy director general of Phnom Penh Water Supply Authority (PPWSA), agreed that offering higher dividends can help to attract investors.
However, he said his firm has some difficulties in offering such dividends. While PPWSA offered dividends of 3.99 per cent last year, Kimleang said it might not be a satisfying rate for some shareholders.
“The truth is that we need more money for infrastructure development, so we need to reserve funds from profits for our counterpart funds when we borrow money from development partners. This is the reason we have difficulties to paying higher dividends,” said Kimleang.