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Six years on, CSX beginning to see dividends from their work

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Guests discuss the stock market at an event hosted by the Cambodia Stock Exchange in Phnom Penh in 2016. Athena Zelandonii

Six years on, CSX beginning to see dividends from their work

The Cambodia Securities Exchange (CSX) is beginning to see the fruits of its six years in business, after a slow start in attracting companies to list on the fledgeling bourse.

Since launching in 2012, CSX has attracted five companies, and this year it has seen some exciting developments, with the introduction of a trading app and record activity late last month.

CSX’s Listing and Disclosure Department director Lamun Soleil said raising awareness about the market is key to their continued success.

“There is limited knowledge among the public and investors about the stock market. There are also a limited number of products available for sale,” he said. Nonetheless, he said public interest is growing.

According to Soleil, the daily average trading value jumped from less than $8,000 in 2015 to more than $15,000 last year.

CSX marked a period of five days ending June 20 when 312,980 shares were traded – an average of 62,596 shares traded per day. The average daily volume for this year currently stands at 7,845 shares.

To boost trading activities, the Securities and Exchange Commission of Cambodia (SECC) and CSX have been encouraging small- and medium-sized enterprises (SMEs) to list on the market by providing training sessions and advertising their new order technologies.

However, the bourse has struggled to attract a single SME since the launch of its Growth Board in late 2015, a list aimed at smaller enterprises.

SECC regulations state that companies are required to have a minimum of $500,000 in operating capital to list, compared to $7.5 million on the main board.

Companies that list on the platform are also required to release one year of audited financial results, compared to the two years required for bigger companies.

“It seems that our strategies of promoting market awareness and educating investors as well as entrepreneurs about the stock market are starting to bear fruit,” Soleil said.

“This year we are starting to have a lot more interest from potential companies and investors about our stock market."

Chan Thol, a local investor, used to trade shares on the market but has since stopped due to low profits.

“Trading activity on the market is not busy, and the volume traded is small, so the stock prices don’t fluctuate,” he said.

Of the five companies currently listed with CSX, three are state-owned.

In May, Pestech (Cambodia) Plc, an electrical power facilities provider, received eligibility approval from CSX. It is expected to be listed soon.

Soleil said the market has the potential to add more than three companies annually, but since 2014 it had only one company added each year.

“A lot of our Cambodian companies still have tax issues and are afraid of transparency. Many founders also don’t want to dilute their ownership in the company,” he said.

‘Three more companies to list’

Iv Ranarith, CEO of securities firm RHB Indochina Securities Plc, said the majority of listed companies are state-owned, which is generally good for long-term returns.

He said investors are still enjoying quick returns from other forms of investment such as property.

“As more companies get listed, we will see higher trading activities on the bourse,” he said.

Soleil expects there to be three more companies listed by the end of this year, hinting that one is directly related to a bank and another an SME.

These additions would be pleasing to at least one investor, as Thol said he wanted to see more companies in the banking and finance sector listed, as they would bring more profits to investors.

“I am more interested in companies from the banking and finance sector. Those will be good shares because that sector is booming in our country,” he said.

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