LOCALLY-OWNED Sonatra Securities has ceased operations due to the slow progress of country’s Cambodia Securities Exchange (CSX), which opened in the middle of 2012, its CEO Sorn Sokna said.
Mr. Sokna said his company – one of three brokerages at the CSX – had failed to make a profit in four years. “We don’t process many transactions and the trading volume is very slow so we need to suspend operations for a while,” he said. “Of course, we see the newcomer in the market, but we need to wait and see,” he said, referring to the upcoming initial public offering of Phnom Penh Autonomous Port, which plans to list on the CSX by the end of the year. “We don’t have enough work for our staff, so we have to suspend operations,” he said.
According to an October 16 announcement Sonatra Securities Firm’s membership with the CSX was suspended as of Monday. Soleil Lamun, acting director for the market operations department at the CSX, told Khmer Times that Sonatra Securities had suspended its business activities for nearly a year. October 19 was the date for renewal of its securities license at the SECC as well as CSX membership, he said, adding that the firm did not apply to renew its license.
The firm’s exit will have no impact on the CSX, Mr. Lamun said. “This withdrawal does not generate a positive image, but we still have 10 securities firms as members. This is more than enough to run a market of our size. Even though most of them are still not profitable, but they keep running the business in expectation of more market activity in the near future,” he explained.
Svay Hay, president and CEO of Acleda Securities, told Khmer Times that his firm has been operating very well since the bourse start trading. “We’re the leading one with market share of about one-third, in term of trading,” he said.
“The upward trend of trading accounts in the market is a basic for the increase of activation rate,” Mr. Hay said.
Presently, the CSX has nine members: six underwriters, one dealer and two brokerages (excluding Sonatra). Only two companies are listed on the bourse: state-owned Phnom Penh Water Supply and a Taiwan-owned garment factory Grand Twins International (GTI).
Mr. Sokna said that despite suspending his firm’s operations he is still optimistic about the market’s progress. “If it starts going well, we will apply for a new license. But, we will move up from broker to a dealer,” he said.
Phnom Penh Water Supply was the first company to sell shares on the bourse, debuting in April 2012. Its shares debuted at 9,400 riel apiece. They closed yesterday at 5,060 apiece. Shares of Grand Twins International debuted at 9,700 riel per share. Yesterday they closed at 4,760 riel apiece, with no trading taking place.
Phnom Penh Autonomous Port will be the second state-owned enterprise and the third company to list. On Monday, it began its roadshow, disclosing its share price rage to the public. It plans to sell 4 million shares at a price of between $1.08 and $1.50 apiece. It plans to sell a second tranche of 2 million shares by 2018.
Svay Hay said that the arrival of the new company will stimulate trading on the CSX, while other IPOs in the pipeline will see it expand further.
“It’s a great move with the second-largest port listing on the market,” he said, adding that a few more IPOs are expected within the next couple of quarters. He said Phnom Penh Special Economic Zone, T.Y. Fashion and Sihanoukville Port planned to list on the CSX. A dozen more companies will follow, Mr. Hay said.
“Many investors see leverage benefits to participate in the market at this time with benefits now and in the future,” he added.