The local office of the largest bank in Vietnam is also a fully licensed securities and underwriting firm for the Cambodia stock market, licensed by the SECC and called Cambodia-Vietnam Securities, or CVS.
Located at 99 Norodom Blvd, CVS is run by a group of young, tech-savvy Vietnamese who are very optimistic about Cambodia’s growth potential. CVS was established by BIDV’s capital, but its representative shareholders are a commercial bank and an investment bank. Two of them are also BIDV’s members, namely BIDC (Bank for Investment and Development of Cambodia) and IDCC (Cambodian Investment and Development Company Ltd.)
Bank for Investment and Development in Vietnam (BIDV) had total assets of $20 billion at the end of 2011. It is known as one of the biggest banks in Vietnam. Their Cambodian bank is called Bank for Investment and Development in Cambodia (BIDC), which has $70 million in capital. CVS is their wholly-owned subsidiary.
According to CVS Deputy CEO Dao Duy Anh, the company puts an emphasis on high-tech and intends to roll out internet stock trading in next month. Their website is: www.cvs.com.kh
“BIDC is a very young bank, but we had some very good results last year. As a shareholder of CVS, BIDC is always go along with CVS in developing customer channels,” Dao said. “We have a lot of Vietnamese customers including Metphone, some big Cambodian companies like Sokimex, Chip Mong Group and a laptop supplier called Anana, which also owns Mekong Net and Angkor Net.”
Another associated company is Cambodia Angkor Air, a joint venture airline company between Vietnam and Cambodia and Cambodia’s first airline. The CSV team expects Cambodia Angkor Air to be a good prospect for an IPO on the CSX.
Dao said CVS expects to concentrate on advising firms which want to be listed and want to mobilize their capital through securities sector.
“I think the young Cambodian is its advantage, the youngest population in the world, in the next five or ten years. This is the potential market because they will grow older and there will be a lot of millionaires in Cambodia. The GDP of Cambodia now is growing and has been very impressive during recent years.”
Dao says the IMF’s data that Cambodia is one of ten developing countries that had 7.7 per cent growth per year during the period 2001 to 2010, 6.9 per cent in 2011 is a good signal.
“This year, 2012, the GDP in Cambodia is predicted to grow from 6.2 per cent to 7 per cent, according to ADB, just this year. I think in the past we have a lot of good signals, and I think for the future we have a good potential market for every investor,” he said.
Dao said tourism grew 2,000 per cent during 2011, industry grew 200 per cent and agriculture grew 30 per cent. He thinks those figures will attract new investment capital from abroad to Cambodia, adding that according to the Royal Government of Cambodia, investment capital to Cambodia totaled $7 billion during 2011, an increase of 260 per cent from 2010.
Dao believes the success of the CSX showed a great demand in Cambodia to invest. “The first IPO attracted more than a thousand investors which means there is a high demand in Cambodia,” he said.
“This is a great time for Cambodia to open the stock market and 2012 is an important year for Cambodia because of the ASEAN chairmanship and because this is the Chinese year of the dragon. This means the stock market can fly very high and very high, because the dragon is the very strongest,” he said. Dao, 31, studied finance at National Economic University in Hanoi, finishing in 2004. CVS’s Chief Financial Officer Steven Dinh says the firm is looking for companies that want to float on the stock exchange with an IPO. Dinh studied in the UK for his post-graduate degree in finance after working Singapore and has been Cambodia for the last year and a half.
“According to my research, the economic cycles are related to technology. Here in Cambodia, Stock market has been set up carefully. Comparing to other countries’ stock markets in region of ASEAN, Cambodia stock market is much younger, but its infrastructure is updated as they learned experience from Korea.”
Dinh said he hoped government regulations would be clarified in the future.
“From the CVS point of view we see the politics of Cambodia as quite stable. However, some regulations are not so clear, or complicated, and the disadvantage is a problem of transparency in financial reports. Now, that the stock market is launched, it gives Cambodian enterprises more standardization, which means public investors can have greater trust in enterprises’ financial reports. We believe the stock exchange is good from a political point of view and an economic point of view,” Dinh explained.
Cambodian rice is already famous in Southeast Asia, Dinh said, an advantage that can be leveraged in the marketing and competition on the international market. “Rice from Kampong Cham is very famous.”
Dinh echoed the comments of other stock exchange experts in Cambodia saying that more IPOs and more liquidity in the stock market is needed.
CVS CEO Dao said there might be a modification of the government’s turnover tax when the stock market becomes more successful.
“I think when the stock market begins to develop the policy will change, and the government will change some policy to attract more financing and capital.”
Dao agreed that Phnom Penh Water Supply Authority (PPWSA) was an excellent choice for the CSX’s first IPO. He said in Vietnam there were no turnover taxes when meant a positive government policy that helped attract a lot of investor money.
“Maybe in the future the government of Cambodia will do the same to make the market strong and attractive enough.”
Dao said he and his team believes in the momentum of the stock exchange that the success of this first IPO is a good foundation.
“We have a good background now for a brighter future. This is only the first IPO and it attracted more than 1,000 investors with demand up to US$200 million, so I hope the signal is very good for the stock market in Cambodia,” he said.