CSX to receive boost with listing of state-owned companies

A Cambodian man talks on his mobile phone behind a logo of the Cambodia Securities Exchange (CSX) during the inauguration ceremony of the CSX in Phnom Penh. (AFP PHOTO/TANG CHHIN SOTHY)

By Avelyn Ng
Channel News Asia
Posted: 03 February 2012

SINGAPORE: The Cambodia Securities Exchange (CSX) has been launched more than six months now but it remains very quiet.

Things may change soon as trading activity may receive a boost with the listings of three state-owned companies.

Experts said there is potential for investors to make a gain from the market but the risks are high as well.

Among the first few companies expected to list on the Cambodia exchange are Phnom Penh Water Supply Authority, Sihanoukville Autonomous Port and Telecom Cambodia.

The exchange said the move is to help kick-start trading on the bourse. It also hopes to attract more private companies to consider listing their companies on the exchange.

"In our view, at the subscription stage of the first IPO, there will be a tremendous demand because both local and foreign investors may want to test the new market," said Kao Thach, Deputy Director General of the Securities and Exchange Commission of Cambodia.

However, some analysts said for emerging countries like Cambodia, it may still take some time before private firms seek a listing in the market.

Johannes Lund, an analyst for Southeast Asia at Control Risks, said: "Currently, you're required to have three years of audited accounts, and they must be audited by one of the global accounting firms. So therefore, a lot of companies simply don't meet that requirement.

"The second factor is probably one of culture. Cambodian companies tend to run like family outfits therefore they will take some time before they see a benefit of the public listing."

Experts also said that such new markets may attract a lot of speculators and this may turn the market volatile.

An analyst from Moody's said Cambodia's weak financial infrastructure and transparency are also likely deterrents. Given the high risks, analysts said only large companies such as banks and telcos may seek a listing in the exchange.

Still, there are international investors that remain upbeat on the prospects of the exchange.

Mark Mobius, executive chairman at Templeton Emerging Markets, said: "We are looking at private equity deals in Cambodia because there's a need for more equity in listed vehicles, but then you've got to start with the private side bringing these companies in the market.

"So lots of opportunity when you consider the fact that it's a relatively large country with no real stock exchange to speak of."

Analysts said that among the companies that could potentially list are those that have performed well, such as tourism and oil and gas-related firms.

Cambodia's economy grew 7.5 per cent in 2011 and it is expected to grow between six to eight per cent over the next few years.

-CNA/ac