Cambodia officially opened its first stock exchange. The problem? There aren't any stocks to trade.

After years of delay, Cambodia opened its first stock exchange Monday. Officially at least. 

But the Cambodian Finance Ministry says shares will not begin trading until around the end of the year, because no national company is ready to go public.

Government officials hope the stock exchange will boost both domestic and international investment in an economy battered by three decades of war and political isolation. 

Cambodia has seen steady economic growth since its civil war ended in 1998, but gains have been limited by high levels of government and private sector corruption. Inconsistent regulation and corruption deter many. Last year's Transparency International index, which ranks corruption perceptions, ranked Cambodia the 24th most corrupt country in the world (out of 178 countries).

But promoters of investing in Cambodia say there is a lot of money to be made.

“I think the risks are overstated. There is the potential for more return relative to the risks than elsewhere,” says Scott Lewis, the chief investment officer for Leopard Capital, a Phnom Penh-based private equity firm.

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Mr. Lewis predicts the stock exchange will encourage companies to reform their business practices to meet standards necessary to list on the exchange. Currently, he says, many businesses do not do proper bookkeeping, and can show no receipts for the payment of taxes.

“They don’t pay them,” he says. “They just wait for a guy [from the government] to come around every year, and they negotiate a price.”

Once such businesses see others raising capital on the exchange, the hope is that they will get their books in order and follow suit.

But companies hoping to list on the exchange, which was initially expected to open in 2009, are still struggling to prepare applications. In a public letter announcing the July 11 inauguration, the Finance Ministry said companies accredited by the Securities and Exchange Commission of Cambodia were “strongly encouraged” to keep working on their applications.

Cambodia’s black market emerged as a response to decades of instability. The Maoist Khmer Rouge eliminated money after taking power in 1975, attempting to create an agrarian utopia. That regime was overthrown in 1979 and Cambodia was ruled throughout the 1980s by an isolated Vietnamese-backed communist government.

In pursuit of economic liberalization

Like its still-communist neighbors, Cambodia has more recently pursued economic liberalization; opening a stock exchange is the latest step. Vietnam launched its stock market in 2000. In January, Laos launched what is perhaps the world’s smallest exchange, listing only two companies.

“The establishment of a stock market will help Cambodia develop additional sources of finance currently buried in various places, and it will boost economic growth,” says Christopher Hnanguie, an economist with the Asian Development Bank who has worked in all three countries.

But the stock exchange's success will depend to a great degree on the government’s ability to clamp down on corruption and promote transparency, he says.

“Perhaps in five to 10 years, the stock exchange will play a key role in strengthening Cambodia’s financial sector, but authorities must proceed carefully to build trust from the Cambodian people and investors,” says Mr. Hnanguie.

Launching the Phnom Penh Stock Exchange: Toward a Legal Framework for Launching a Stock Exchange in an Underdeveloped Country

The idea of launching a capitalist stock exchange in an underdeveloped country where capital was abolished just thirty years ago seems optimistically free-market, if not naively silly. However, examining the possibility of launching the Phnom Penh Stock Exchange can serve as a cipher for examining the problem of economic development in the so-called "third world" in general. Furthermore, such an analysis can be useful to thinking about how a generalized legal and regulatory framework can be customized to help a country address its economic development in the context of its own markets, culture, and brand of democracy.

Launching any stock exchange is a massive structural effort, and Cambodia is a prime example of the extra difficulties that a developing country faces in such an undertaking. The list of problems faced by developing countries is a long one: lack of initial capital, lack of investment opportunities, lack of reliable information, lack of infrastructure, corruption, and the difficulties (especially in former communist states) of learning capitalism from the ground up. But despite this formidable list, the experience of quite a few developing countries in the last thirty years has shown that launching a stock exchange is not only possible, but can be a boon to economic development.

All of the relatively underdeveloped countries that have launched stock exchanges have shared certain criteria: the backing of a strong government (not necessarily their own), a relatively stable government, an extant industrial base thirsting for capital, and the capital to ...

 

Establish Cambodia stock exchange in 2009?

“Cambodia has signed agreement with South Korea together in order to cooperate to establish Stock exchange in Cambodia”

PHNOM PENH, Oct. 17 (Xinhua) — Cambodian Finance Minister KeatChhon has announced that the Kingdom will move forward with plans to establish a stock exchange in 2009 despite concerns over the global market crisis and suggestions that it would be delayed until 2010, national media reported Friday.

“We will not rush to establish the stock exchange in Cambodia, but we will build a strong base, including hard and soft infrastructure,” Keat Chhon was quoted as saying in the Phnom PenhPost.

The country is in the process of finalizing securities rules and the exchange building has broken ground, he said.

He added that the Council of Ministers has begun drafting subdecrees to implement new laws about an initial public offering.

“The establishment of a stock market will help Cambodia develop additional sources of finance currently buried in various places, and it will boost economic growth,” Keat Chhon said.

Hang Chuon Naron, secretary general of the Ministry of Economy and Finance, said the stock market will progress according to the government’s long-term financial vision for the country and is not vulnerable to the global crisis.

“We hope the stock exchange will provide longer-term finance compared to what we have relied on in the past, such as banks, national budgets, foreign aid and foreign investment,” Hang Chuon Naron told the Post.

“I think in five or ten years, the stock exchange will play a key role in strengthening Cambodia’s financial sector, but we must proceed carefully to build trust from our people and investors,” he said. Source: Xinhuanet News

15 firms granted licence for Cambodia stock exchange

The Cambodia’s institution which is controlled the process of Stock exchange in Cambodia, is the Securities and Exchange Commission of Cambdoia [SECC] of Ministry of Finance and Economics. The SECC also licensed 15 amongst 22 firms in Cambodia in order to work on Stock exchange in Cambodia.

Granting licences were the important step in order to process stock market and the number of permits granted reflects the initial requirements of the Cambodia stock market.

Underwriters: provide advice on the issue of securities – such as pricing, public offerings and distribution timelines. The firms get licence of Underwriters such as Tong Yang Securities (Cambodia), OSK Indochina Securities, CANA Securities, CAMPUBANK Securities, Cambodia-Vietnam Securities, SBI Phnom Penh Securities, Phnom Penh Securities Firm.

Dealers: trade in securities for their own accounts and risk. There are two companies to be granted licence of Dealers such as Sacombank Securities (Cambodia), Golden Fortune (Cambodia) Securities.

Brokerages: buy and sell securities on behalf of and by orders of clients for a commission fee. Licence of Brokarages consist of ACLEDA Securities, Cambodia Capital Securities, SONATRA Securities, CAB Securities,

Investment advisory: firms advise their public investors on securities investment. There are two firms such as Angkor VDS Securities PLC, Angkor Capital Advisor.

Cambodia stock exchange officially opened

Creating stock exchange in the Kingdom of Cambodia is the initiative between Cambodian government and Korea Exchange since 2007. Cambodia Securities Exchange (CSX) will be held 55 percent by Cambodia and 45 percent by Korea Exchange. The both sides planned to open it at the end of 2009 but the plan failed because of the global financial crisis.

Cambodia Securities Exchange was launched officially on July 11, 2011 after the government delayed it several years. Opening stock market in Cambodia has been applauded by government officials, investors and academics. It is expected that the process of stock market is advancing transparency throughout the country and making way for boosting Cambodia’s economic growth.

By the way, it is good for businessmen and investors who are able to expand their business by issuing stocks as a way of raising more and more cashes and selling stocks is cheaper than taking a loan from commercial banks. At the meantime, local business and investors will have opportunity for expanding their investments by buying property or putting their money in the banks.

Giving speech at the opening of the CSX, Finance Minister Keat Chhon said that trading was expected to begin by the end of the year. He said that there are three state-owned firms, including the Phnom Penh Water Supply Authority, Telecom Cambodia and the Sihanoukville Autonomous Port, having announced plans for listing.

Planning to launch a stock market is needed to find new ways to attract international capital besides international aid and bank loan. In addition, the National Assembly also approved a securities law on insurance and trading non-government securities in order to pay the way for the market.

The Southeast Asian countries which opened a stock market are Singapore, Thailand, Laos and Vietnam.

Cambodia stock exchange needs an e-trade law

After delaying the opening of stock market in Cambodia for several years due to the global financial crisis in 2008, the Kingdom of Cambodia had launched the Cambodia Securities Exchange [CSX] in July 2009. It is a positive sign for starting the process of Cambodia’s market. But so far, Cambodia does not make e-trade law yet which is important for stock market.

Cambodia plans to pass an e-trade law by the end of this year and also appeals for the US-ASEAN Business Council to help finalize the draft law because it is very crucial for investors to do business in Cambodia, if without it, it is hard for the government to manage transactions online.

Investors will lose confidence in stock market if there is no an e-commercial law. In addition, the law is necessary to protect all investors’ data in the event of a system error or crash.

Commercial Minister Cham Prasidth said in a meeting of the US-ASEAN Business Council in Phnom Penh that all the transactions are processed electronically. If there is no an e-trade law, how to operate the stock exchange.

Ming Bankosal, Securities and Exchange Commission of Cambodia director-general, told local media that contracts could be drawn up between investors, securities firms and stakeholders in order to avoid loss in the event of a system crash.

He also added that “Even if our e-commerce law has not materialized, we are going to set a clear mechanism to deal with problems with the electric system.

The e-trade law will assist all Cambodia’s small to medium-sized enterprises in expanding their global target market and increasing their profit. It is one of the only tools which can help SMEs to sell their products around the world.

Initiative process of Cambodia stock exchange

Creating stock market is a new concept for Cambodia and it is not easy to run stock market smoothly if without accountability and transparency. The initiative process to establish Cambodia stock exchange was conducted after the growth of Cambodian economy and political stability and.

By the way, in order to Cambodia stock market works well, it depends on the number of companies willing to put their capital into the stock market. In addition, providing training about stock market education is important for potential investors. If investors don’t understand how to work, the process of stock market will not run successfully.

In the earlier 2009, the Kingdom of Cambodia had signed an agreement with representatives from South Korea’s stock exchange, the Korea Exchange, Asia’s fourth-largest bourse operator, in order to establish the stock market in 2009 but their plan failed.

Cambodia’s prime minister Hun Sen said during a government meeting with businessmen and investors that the state of Cambodia’s finance industry was in a stable position which is not worrisome because Cambodia has not yet got a stock market. He added that if there is no stock market, there is no problem.

According to the law on The Issuance and Trading of Non-Government Securities (Preah Reach Kram N0 NS/RKM/1007/028, Securities and Exchange Commission of Cambodia (SECC) was established under the Ministry of Finance and Economics, in order to regulates the securities industry in Cambodia to contribute to socio-economic development through capital mobilization from public/ securities investors to meet the demand of financing for investors.

SECC’s missions are:

• Develop and maintain the confidence of public investors in the Kingdom of Cambodia by protecting their lawful rights and ensuring that the offer, issue, purchase and sale of securities are carried out in a fair and orderly manner;
• Promote the effective regulation, efficiency and orderly development of the securities markets;
• Encourage the varieties of saving tools through buying of securities and other financial instruments;
• Encourage foreign investment and participation in the securities markets in the Kingdom of Cambodia; and
• Assist in facilitating the privatization of state-owned enterprises in the Kingdom of Cambodia.

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CSX trading postponed again until next year

Trading on the Cambodia Securities Exchange will be delayed once again until the beginning of 2012, Minister of Economy and Finance Keat Chhon said yesterday.

He blamed an incomplete regulatory regime and the public’s lack of confidence in the stock market as reasons for the delay, saying trading would most likely start early next year.

“It’s probably a little bit later than [the original] schedule. It will probably start trading from January,” Keat Chhon said, speaking to reporters after his speech at an International Business Chamber of Cambodia conference in Phnom Penh.

The stock exchange officially launched in July, though no companies were yet ready to list. Keat Chhon said at the time that stocks would begin trading by year’s end, before revising his outlook yesterday.

“We had been working conscientiously and still discussing some more rules and regulations to build a comprehensive rules and regulation for participants in the stock market,” he said.
“It can be in operation only if there is public confidence,” he added.

Keat Chhon also confirmed that three state-owned enterprises – Sihanoukville Autonomous Port, Telecom Cambodia and Phnom Penh Water Supply Authority – had been preparing for initial public offerings on the stock exchange.

Keat Chhon said another state-owned firm, Phnom Penh Autonomous Port, is also preparing a listing, as well as a number of private companies. However, he declined to name those private companies.