Securities industry insiders urged the National Bank of Cambodia (NBC) and Securities and Exchange Commission of Cambodia (SECC) to push for more banks and microfinance institutions (MFIs) and insurance companies to list in the local stock exchange.
They also urged the NBC to consider the use of the US dollar for trading in the stock market.
Iv Ranarith, CEO of RHB Indochina Securities, said at a Seminar of Comprehensive Understanding of Securities Market in Cambodia held on Friday at the Cambodia Securities Exchange (CSX) that currency is one of the challenges for the limitation of the stock market growth.
He said the use of the local currency or KHR for trading makes it difficult to attract more investors as they are afraid of the rate of fluctuations that may impact the trading schemes.
Mr Ranarith said to boost the stock market’s growth and attract more investors, the US dollar should be the currency for trading while more banks, microfinance and insurance companies should be encouraged to list or invest in the stock market.
“Currency is also a challenge for us. The government should consider the US dollar as the trading currency for the stock market.
“It will be an advantage to attract more investors to the market as we already have the dollar in our economic system,” he said, adding that, “Most investors are afraid of the loss in rate conversion if they want to invest in the stock market, as they have to exchange their foreign currency to the local currency for trading. It is contrary to what the investors want.
“We want to push the banks and MFIs and other potential companies to join the market to create choices for both local and foreign investors. There are not enough investors in the market to push for growth,” Mr Ranarith said.
Ha Jong Weon, vice chairman and chief operation officer of the Cambodia Securities Exchange (CSX) said the stock market is a platform to boost a company’s competitiveness, offering various channels to source capital, and boost the image of the companies thus attracting more investors to the country.
Mr Ha said in order for the stock market to become more aggressive and get the public’s attention, the NBC should woo the banks and insurance companies to list.
“For the short term, we want banks and MFIs in Cambodia to list in the market in the next three years. We urged the NBC to push the financial institutions to issue shares or bonds in the exchange as those institutions will help boost the market,” Mr Ha said.
Hor Likea, acting director of research, training, Securities Market Development Department of SECC said though the Cambodian stock market did not develop as fast as was expected, the government has put in place short, medium and long term plans.
“We are working with relevant stakeholders to push banks and MFIs to be listed in the stock market because we believe when more such institutions are listed they will build more trust among the investors and other companies.
“We are trying to simplify the listing procedure, ensure the listed cost is low, have tax incentives and allow all companies to provide audited financial statements for only two years back to encourage more companies, banks and MFIs to list in the market.
“We are also creating more products increase the choices. Now we are preparing other products such as Collective Investment Scheme, Bond, Derivatives, and the Futures Market. These products will increase the choices for investors,” Mrs Likea said.