Reactions to the launch of the Cambodia Securities Exchange

(The success of the Cambodia Securities Exchange) really depends on how the corporate community responds and how the public responds, too. It’s a totally new experience … If there’s a whole lot of bad news in the beginning, the public will be hesitant to dip their toes in.

Our market standards are low now, but I expect them to be raised soon. Before, companies didn’t know how to prepare to list. Now they will see big companies listing and will learn from them how to do that. Then we will have small, family companies learning how to list.

What’s important is that the index is going up, or else investors will say goodbye like in Laos. Continuous growth is the key issue.

Initially, the big challenge in the Cambodian market is getting trust from the people.  Another is getting patience from every stakeholder. Many people think this market should be successful within six months, but they need to have a bigger vision.

It puts Cambodia on the financial world map. There’s broader overseas interest in the market. It’s going to play a big role in bringing capital to the market.

For businesses in Cambodia, the exchange is another avenue to rich funds … I believe it will take a couple of years (to reach normal market operations), but trading will probably start at the end of the year. It’s something that going to take time.

Interviews and photos by Don Weinland

WITH the highly anticipated arr-ival of Cambodia’s first stock exchange yesterday, investors in the Kingdom are looking to neighbouring countries for the most suitable model to follow.

Local stock exchanges in  Laos and Vietnam have been cited as the natural comparisons by regional investors.

Vietnam’s Ho Chi Minh City Stock Exchange was launched in 2000, initially with just two equity issues trading.

As of July last year, a total of 247 companies were listed on the exchange.

“The success of the exchange will be based on investable companies and shareholder value, not population or country size,” VinaSecurities director Adrian Cundy said yesterday.

“So the fact that Vietnam is a much larger country, with nearly 90 million people, doesn't matter much for Cambodia's chances of launching a successful stock exchange.

“That's really where the engine of growth is in a liberal-ised economy.”

Vietnam has many finance and real-estate companies, SMEs and, more recently, consumer plays.

This was due to growth from property companies building infrastructure with loaned money, Cundy said.

“It's hard to say how things will play out in Cambodia …Cambodia has a lot of opportunities,” he said.

Naoto Sumiyoshi, chief researcher at the Japanese investment company WorldStock  JP,  believes that although Vietnam has successfully matured as a market “with high prices, the early stages did not look positive.

“We can expect the same  increases here,” he said.

WorldStock’s investments within Vietnam include banks, foods, agriculture, energy and real estate.

Sumiyoshi said the situat-ion in Laos was “not good” and he expected more companies to list on the CSX.

The Laos Securities Exchange began operating in January, 2011 and, like the Cambodia Securities Exchange, opened without traders. Two listed compan-ies, Electricite du Laos and Banque Pour Le Commerce Exterieur Lao, are now trading, however.

Laos was a better model, representing “exactly what is going to happen here”, Martin Desaultels, regional managing partner of Phnom Penh-based legal and tax advisers DFDL Mekong said at the launch yesterday.

“It's been going well in Laos, and I predict a similar path here,” Desaultels said.

He said it was good that the exchange was launching now and getting people interested.

“It's the starting signal … it's open for business, so people will start preparing.”

There was more growth potential in Cambodia, but bigger companies in Laos, so while Cambodia might have more companies, the market cap size was likely to be larger in Laos, Desautels said.

Han Kyung Tae, managing director of Tong Yang Secur-ities Cambodia, also highlighted the growth potential of the Cambodian economy.

“Cambodia is at the infant level of its development. The market is growing very fast,” Han told the Post in May.

The first offerings would come near the end of this year, most likely among the country’s stronger sectors, banking and telecommunications, and possibly agriculture, services and garments.

“They will continue to remain attractive targets for foreign investors,” Han said.

He expects between five and 10 companies to hold public offerings during the first couple of years after the exchange’s launch.