Logo of Phnom Penh Post newspaper Phnom Penh Post - A primer on how to enter the stock market



A primer on how to enter the stock market

Content image - Phnom Penh Post
A CSX employee explains to journalists the price of listed company Grand Twins International. Heng Chivoan

A primer on how to enter the stock market

So you have a decent sum of cash and you’re thinking about investing it in Cambodia’s stock market. Before you dive headfirst into share trading, there are a few things you will need to do.

For starters, you will need to obtain an investor identification card and set up a trading account at a local brokerage firm.

Despite the small size of Cambodia’s stock market, there are a fairly large number of brokerages to choose from. The Securities Exchange Commission of Cambodia (SECC) – the national market regulator – publishes a list of licensed securities firms on its website, including seven designated underwriters, two brokers and a securities dealer – all of whom are approved for handling the stock trades of their clients.

That said, not all brokerages are created equal.

As a novice investor in a frontier market, you would be wise to select one whose management or parent company has racked up some experience operating in one of the heavyweight regional exchanges.

Also consider that some brokerages have their own research departments, which can give you access to invaluable market information and analysis to help guide your investment decisions.

A clumsy or non-existent website is never a good sign, and while not necessarily a barometer of a brokerage’s service level, the capital market is all about timely data and transparency – and that would be a reasonable expectation for any investor.

Foreigners in particular need to ensure that the brokerage provides clear information and communications in a language they understand.

Foreigners should also check the brokerage’s rules for account ownership as most only cater to clients with local bank accounts, and there may be disclosure requirements from tax authorities in your home country.

In addition, some securities firms may have a minimum deposit requirement for individual investors – a way of ensuring that new clients bring in enough incremental value to cover the expenses of having them as a customer.

Content image - Phnom Penh Post
CSX employees monitoring transactions. Sovan Philong

Once you have selected a securities firm you will need to apply for an SECC-issued investor identification card, which is valid for up to 20 years and is required to buy or sell stock on the Cambodia Securities Exchange (CSX). Most brokerages will handle the procedure for their clients when they apply to open a trading account.

Investors will need to complete an ID application form and include two copies of their Cambodian identification card – or in the case of foreigners, a passport. The application, which can be submitted to your brokerage in person or by mail, also requires two 4x6 cm photos and a copy of the client’s signature or right thumbprint. The processing fee for the card is 20,000 riel ($5).

Your investor ID card should arrive in about a week, but expect longer waits during busy periods, such as during the run-up to an initial public offering. The unique number on this card is required to complete the application form for a new trading account. The account is usually linked to a local riel-denominated savings account at the brokerage’s affiliated bank, and you will need to submit a copy of your passbook and a signed authorisation letter to allow transfers between the two accounts.

Once a trading account is opened, investors can arrange to transfer funds into it from the associated savings account, or deposit them directly.

To buy shares, an investor must deposit the full amount of the purchase price into the trading account ahead of the transaction order. Funds from the sale of shares will be deposited into the trading account two working days (T+2) after the sale, and can be withdrawn by transferring them into the savings account.

Now, with your investor ID in hand and some funds in your newly-opened trading account, you are ready to begin trading.

MOST VIEWED

  • With herd immunity likely in 2022, is Cambodia ready to reopen for tourism?

    The government aims to inoculate 80 per cent of the target population by June next year, giving it a head start among regional peers to reboot the sector but first, it has to do a few things to up its game A sign on a glass

  • Quarantine still a must for all arrivals, in next Covid chapter

    Since early May, an average of five to 10 Cambodian people have died from Covid-19 a day with many others testing positive amid the ongoing community outbreak. At the same time, however, hundreds of patients also recovered a day. The first Covid-19 case in Cambodia was

  • US wants 'full access' to Ream Naval Base

    On June 11, the US embassy's Defense Attaché Colonel Marcus M Ferrara visited Ream Nava Base in coordination with Cambodian officials following the recent approval of Prime minister Hun Sen to allay the concerns on Chinese military presence at the base as raised by US Deputy

  • First commercial gold mine online

    Australian miner Renaissance Minerals (Cambodia) Ltd on June 21 began the commercial operation of its $120 million Okvau Gold Project in the northeastern province of Mondulkiri, becoming the Kingdom’s first gold producer. Located in the Okvau area in southwestern Mondulkiri province’s Keo Seima district, the

  • Jab drive heading to 5 provinces

    The government is set to vaccinate more than 1.2 million people in five provinces after finishing with Phnom Penh and neighbouring Kandal in an ongoing campaign administered by the ministries of Health and National Defence. The five provinces are Preah Sihanouk, Kampong Speu, Takeo, Kampong Cham

  • New immigration bill targets illegal foreigners in Kingdom

    General Department of Immigration (GDI) officials are discussing revisions to the new draft law on immigration to prevent foreigners from entering Cambodia illegally and to supervise those living in the Kingdom more effectively. The revisions draw wide support among civil society organisations. GDI director-general Kirth