Industrial insiders and experts on the Kingdom’s nascent stock market have suggested the government set up a fund as an investment vehicle designed to broaden the local public investor base, based on The Thai Fund (TTF).
Incorporated in 1987, TTF is a non-diversified, closed-end management investment company. The fund’s investment objective is long-term capital appreciation through investment primarily in equity securities of companies organised under the laws of Thailand.
KT Han, managing director of leading underwriter firm Yuanta Securities, said the Thai fund collects a certain portion of income from the general public and invests it in the local stock market for the long term, aiming to benefit from both development of the local market and the general public for long-term financial gain.
“It may seem too early to introduce such an investment program to Cambodia where the general publics’ personal income level is still very low to afford such a long-term investment, which is generally regarded as more risky,” he said. “But we could start such investment program for the general public on a smaller scale now.
“I believe it would eventually benefit the early participants financially because it is quite clear that Cambodia’s capital market is currently going through the bitter experience of typical early stage market development, which is temporary.” However, he added that he has no plans to raise the idea with the government at the moment.
Lamun Soliel, director of market operations at the Cambodia Securities Exchange (CSX), also said it would be a good move for the stock market once there is a fund that complements trading activities.
“It would be great if that kind of fund exists in Cambodia. It would help mobilise saving funds from Cambodian households to invest long term in the Cambodian stock market by investment professionals,” he said. “However, the funds must be carefully managed. More precisely, the investments must be diversified among lower risk securities so investors won’t lose – in the worst case – much of their long-term savings and their trust in this sub-sector of the stock market.”
Svay Hay, president and CEO of brokerage firm ACLEDA Securities, welcomed the idea, saying it would help boost trading activity on the market. “Those kind of funds, as institutional investors, are good for the market, but they’re under the CIS [collective investment scheme] regulation, which is not yet in place at this moment,” he said
The CSX officially launched trading in April 2012 with the listing of state-owned enterprise Phnom Penh Water Supply. Garment manufacturer Grand Twins International was added to the bourse in 2014, Phnom Penh Autonomous Port followed in 2015 and the latest company, Phnom Penh Special Economic Zone Plc., was added last May.