A move by the US Nasdaq stock exchange to make it harder for Chinese companies to go public could create opportunities for other exchanges like the Cambodia Securities Exchange (CSX).
News agency Reuters reported on Monday that Nasdaq’s new curbs on Chinese initial public offerings (IPOs) represent the latest flashpoint in the financial relationship between the world’s two largest economies. That includes tension over trade, technology and the spread of Covid-19.
The tightening of its listing standards reflects Nasdaq’s concerns about some Chinese companies seeking US IPOs.
The new rules will require companies from some countries, including China, to raise $25 million in their IPO or at least a quarter of their post-listing market capitalisation, reported Reuters.
CSX vice-chairman Ha Jong-weon said more Chinese companies will list on other bourses outside the US, presenting a favourable opportunity for other stock markets.
“I think it is an opportunity for our stock exchange to list qualified companies including Chinese and other Southeast Asian companies registered in Cambodia,” he said. “That will increase the number of our listed companies and boost our trading activity and market liquidity.”
SBI Royal Securities Plc managing director Seng Chan Thoeun also pointed out that Nasdaq’s tightened rules would be a boon for stock markets in the region, including the CSX.
“It could be an exceptional opportunity to get very qualified companies listed here,” said Chan Thoeun. “This will attract other good companies. And we need to set procedures and more regulation for IPOs of overseas companies to better manage them in terms of corporate governance, information disclosure and business operations.”
Ha said the CSX, in collaboration with other securities companies, has organised several roadshows in China, but mainly to attract investors rather than companies which could potentially list.
This, he said, is because current regulations only permit entities or public limited companies registered in Cambodia to go public.
Several companies registered in the Kingdom – including Chinese-owned ones – have inquired the CSX about listing requirements, documentation and procedures, he added.
The CSX welcomed its first domestically listed company, the Phnom Penh Water Supply Authority, on April 18, 2012. As of this month, the market has 11 listed firms – six bond-listed companies and five stock-listed companies.
The listed firms have raised $223 million in trading. Market capitalisation increased 58 per cent from $442 million in 2018 to around $701 million last year. Trading volume increased nearly six-fold from $26,000 in 2018 to around $150,000 last year.
As of last year, there were five central counterparties in the derivatives market, 27 derivatives brokers, five fund management companies and five trustees.