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Capital market grows in face of Coronavirus

Sok Chan / Khmer Times Share:
Sou Socheat, director-general of the Securities and Exchange Commission of Cambodia. KT/Chor Sokunthea

While some sectors in the country have been hit by the COVID-19 pandemic this year, the capital market in contrast saw growth in terms of listing companies and investors, said Sou Socheat, director-general of the Securities and Exchange Commission of Cambodia (SECC).

In an exclusive interview with Khmer Times, Socheat said there were five companies floated on the securities exchange this year, bringing the market total to 13 listed companies. All the 13 listed companies collected capital in the market totalling $243 million. Among the 13 listed companies, seven listed stock and six listed corporate bonds.

“More investors are interested in the capital market in Cambodia,” Socheat added.

Many questions are raised as to why more companies listed in 2020 during the pandemic. Socheat said no one knew there would be a pandemic this year. Moreover, all the listed companies in 2020 were ready since 2018, so they had investors on hand and proceeded with their listings.

He added there are also some signs of a slowdown in trading in the securities market. But it has happened globally because of COVID-19. Potential investors were deterred. Some continued to invest and some are waiting to see the outcome. “People started to resume investing so that it motivated the listed companies to continue their work,” he added.

“We had a discussion with relevant stakeholders in the securities market on how we could turn COVID-19 from a global challenge to an opportunity because the spread of COVID-19 caused the economy to drop down,” he added.

“We discussed how to urge more companies to list in the capital market and how to prepare the investor base on a bigger scale. This is what we are going to do to transform the risk of chance in the securities sector,” he said. The SECC will have to look at the facilitation to encourage them to list.

The SECC will host a second programme which aims to help small and medium enterprises (SMEs) because a lot of them lack understanding of the law, regulation, compliance, financial reporting and corporate governance.

According to Socheat, the programme is to strengthen the SMEs’ capacity and, after they join the programme, some will be ready to list on the market.

“We hope that one SME will register on the growth board and list on the securities market by the end of this year,” Socheat added. “The SECC is seeking ways how to push SMEs to join the market,” he said.

To make the Cambodia Securities Exchange (CSX) attractive for investors, the SECC and the securities market will study options by allowing investors to trade
in dollars, said Socheat. However, he added the share or corporate bond must be denominated in riels (KHR).

“By allowing investors to trade in dollars because it is an attractive method given everyone holds dollar liquidity more than Khmer riels, they are happy when we can trade the currency that they have. However, the share or corporate bond must be denominated as the Khmer riel,” he added.

“The CSX is now studying how to trade in dollars. If investors have dollars, they can buy securities. But the share or corporate bond must be denominated as the KHR. We want this system in the market to facilitate investing by those who have dollars,” Socheat said.

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