By Rachel Kelly
Posted: 20 May 2011
Channel News Asia
SINGAPORE : Investors eyeing opportunities in Southeast Asia will have a wider choice, as new stock exchanges open in Laos and Cambodia.
But experts said it may take some time for them to attract foreign funds.
One reason is that there are still gaps in regulations. In addition, local companies will require time to adjust to the listing environment.
Frontier economies such as Indonesia and the Philippines have been the apple of some investors' eye as they look to tap into growth in emerging economies.
Laos, which has enjoyed average GDP growth of around 8 per cent for the last four years, launched its exchange earlier this year with two listed companies and a few in the pipeline.
Experts said it could hold some potential but it will take some time for the market to be sweet enough for international investors to take a bite.
William Greenlee, country managing director (Lao PDR) of DFDL Mekong, said: "The rules that are available at the moment, they are quite extensive, (but) there are some holes - you have the general framework guidelines of what they have to do; however there needs to be more detail added and that will come."
Industry watchers said that it will take some time for local companies to adjust to listing rules and requirements.
Mr Greenlee said: "I think they are moving slowly. The state-run companies that are going to be listing in the future, you have a telecom (company) that is rumoured to be listing soon, and you have Lao Airlines, you have a cement company - (they) all are very good assets as far as we know...maybe in a year or two, when these large international companies that have local entities, when they may list, that is what I am looking forward to.
"In Laos, for a company to operate, it must have a Lao entity, it must have a subsidiary, so those are the entities I think in the next couple years once they see that the exchange is operating well and that there is transparency, there is certainty. I think that is when we will see the stock exchange really picking up some steam."
Officials said that this is also a challenge in Cambodia as most businesses are family run.
Cambodia is set to open the doors of its exchange in July, with three state-owned enterprises the first to go public.
Kao Thach, deputy director general of the Securities and Exchange Commission of Cambodia, said: "From the issue side, they need to restructure, most of the companies are family orientated, so they need to restructure to have a board, and they need to convert from the Cambodian accounting standard to IFOS, which we (will) put into operation by end of this year - that is a big challenge for them."
While trading in Laos may be primarily in KIP, the exchange is open to other trading options.
Vathana Dalaloy, acting secretary general (Lao PDR) of the Securities and Exchange Commission Office, said: "We open it to both domestic and foreign investors and at the same time, we also need quality.
"However, whether we will be successful or not in the next five years is more or less up to our policy, our human resources and also the legal framework, and in order to meet those objectives, that is why the government has decided that we need to upgrade our security exchange decree into a security law, and that needs to be completed by next year."
Experts said that they expect traditional sectors such as agriculture, mining and the services sectors to be drivers of the fledgling exchanges.
Posted: 20 May 2011
Channel News Asia
SINGAPORE : Investors eyeing opportunities in Southeast Asia will have a wider choice, as new stock exchanges open in Laos and Cambodia.
But experts said it may take some time for them to attract foreign funds.
One reason is that there are still gaps in regulations. In addition, local companies will require time to adjust to the listing environment.
Frontier economies such as Indonesia and the Philippines have been the apple of some investors' eye as they look to tap into growth in emerging economies.
Laos, which has enjoyed average GDP growth of around 8 per cent for the last four years, launched its exchange earlier this year with two listed companies and a few in the pipeline.
Experts said it could hold some potential but it will take some time for the market to be sweet enough for international investors to take a bite.
William Greenlee, country managing director (Lao PDR) of DFDL Mekong, said: "The rules that are available at the moment, they are quite extensive, (but) there are some holes - you have the general framework guidelines of what they have to do; however there needs to be more detail added and that will come."
Industry watchers said that it will take some time for local companies to adjust to listing rules and requirements.
Mr Greenlee said: "I think they are moving slowly. The state-run companies that are going to be listing in the future, you have a telecom (company) that is rumoured to be listing soon, and you have Lao Airlines, you have a cement company - (they) all are very good assets as far as we know...maybe in a year or two, when these large international companies that have local entities, when they may list, that is what I am looking forward to.
"In Laos, for a company to operate, it must have a Lao entity, it must have a subsidiary, so those are the entities I think in the next couple years once they see that the exchange is operating well and that there is transparency, there is certainty. I think that is when we will see the stock exchange really picking up some steam."
Officials said that this is also a challenge in Cambodia as most businesses are family run.
Cambodia is set to open the doors of its exchange in July, with three state-owned enterprises the first to go public.
Kao Thach, deputy director general of the Securities and Exchange Commission of Cambodia, said: "From the issue side, they need to restructure, most of the companies are family orientated, so they need to restructure to have a board, and they need to convert from the Cambodian accounting standard to IFOS, which we (will) put into operation by end of this year - that is a big challenge for them."
While trading in Laos may be primarily in KIP, the exchange is open to other trading options.
Vathana Dalaloy, acting secretary general (Lao PDR) of the Securities and Exchange Commission Office, said: "We open it to both domestic and foreign investors and at the same time, we also need quality.
"However, whether we will be successful or not in the next five years is more or less up to our policy, our human resources and also the legal framework, and in order to meet those objectives, that is why the government has decided that we need to upgrade our security exchange decree into a security law, and that needs to be completed by next year."
Experts said that they expect traditional sectors such as agriculture, mining and the services sectors to be drivers of the fledgling exchanges.
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