PHNOM PENH, April 18 (Xinhua) — The Cambodia Securities Exchange (CSX) has seen slow progress in its first year of operations because there has been only one listed firm and public knowledge about the stock market remains low, officials said Thursday.
The CSX was officially launched trading on April 18 last year with only one listed enterprise, the state-owned Phnom Penh Water Supply Authority (PPWSA).
“Because there is only one product in the stock market now, so the trading action is limited,” Ming Bankosal, Director General of the Securities and Exchange Commission of Cambodia, which is the CSX’s regulator, told Xinhua over telephone. “I believe that the situation will be improving from this year as three or four enterprises are planned to list on the CSX this year.”
He said at the launching of the CSX, there were only 3,600 investors, but it was now up to 5,000 investors.
Ming Bankosal was optimistic about the market’s future, saying that for a long-term strategy, the stock market will hugely contribute to developing Cambodian economy.
“In my vision, the future of CSX will be bright as Cambodia holds the free market policy and foreign investors such as China, the United States, Japan, France, and the United Kingdom are confident in Cambodia’s political stability and economy, so more investors will come to Cambodia,” he said. “More investors will need more capitals, so the stock market will be one of their choices to mobilize capitals.”
Nguon Meng Tech, Director General of the Cambodia Chamber of Commerce, said that “public confidence” remains a major obstacle in developing the country’s stock market.
“In my point of view, the idea of the stock exchange is still new here, and it needs at least another three years to promote public awareness about the market,” he told Xinhua. “People are reluctant to invest their money in something that they have no knowledge about.”
Svay Hay, chairman of the broker Acleda Securities Plc, said the CSX is currently well-equipped with high technologies, laws and regulations, and market intermediaries.
“I think that the market has everything in place, but the challenges are no listing companies and poor knowledge among the public,” he told Xinhua. “The market sees slow progress in its first year of operations because there is only one issuer — the PPWSA — so the trading action is limited as investors have no option.”
The PPWSA sold 13 million shares in its first IPOs (Initial Public Offerings) in last April with a share going for 6,300 riel (1.57 U.S. dollars).
In May, the highest-priced stock was about 2.55 U.S. dollars a share, and then, it had gradually lowered to 1.55 U.S. dollars.
On Thursday, the PPWSA’s share price dropped by 4.91 percent to 6,200 riel (1.55 U.S. dollars) per share from 6,520 riel (1.63 U.S. dollars) in previous day. Thursday’s trading volume was only 100 shares worth 620,000 riel (155 U.S. dollars), according to data of the CSX.
Last week, the PPWSA allocated its first dividend to shareholders. According to the firm’s announcement, the dividend payout ratio was seven percent, with a total dividend of 2.4 billion riel (600,000 U.S. dollars), and the dividend per share is 27.7 riel (0.69 cent of U.S. dollar).
Low dividend allocation has discouraged some investors from the market.
Ming Bankosal agreed that the first dividend was very low, but defended that the firm has to keep some portions of the profit for business expansion.
“Normally, shareholders want to get much profit, but the company cannot allocate all the profit to the shareholders, it needs to keep some for business expansion, or it has no capital to expand the company’s business,” he said.
The CSX was initiated by the Korean Exchange in 2007. It is a joint venture between the government of Cambodia holding 55 percent of the stakes and the Korean Exchange owning the remaining 45 percent.
By Nguon Sovan | 18 April 2013 | Xinhua