The Securities and Exchange Commission of Cambodia (SECC) is raising the bar – it wants to woo cash-rich foreign investors to bolster the Kingdom’s capital market.
Since its establishment, the SECC has taken painstaking efforts to put in place the necessary regulations to build a vibrant capital market and instill confidence among potential investors.
“We want more foreign investors to come to our market; we want institutional investors. Not only do we have the equity market, but we also now have the bond market.
“We will move step by step, and so in the next 10 years we can say we are an attractive market, although not as big as the Hong Kong or Singapore markets,” SECC director-general Sou Socheat told The Post.
As the regulator of the nation’s capital market, the SECC, established in 2009, has introduced a range of regulatory requirements for the securities market, as well as launching reforms to improve market efficiency, promote awareness regarding stock trading and lift the domestic market towards reaching an international standard, similar to its peers in the Asean region.
It has been a slow start, and so far only five companies have issued equity securities, with three issuing bonds, and listing on the Cambodia Securities Exchange (CSX). More could join this year however, especially after the much anticipated Acleda Bank Plc initial public offering takes place in April this year.
Acleda is the first commercial bank to embark on such a corporate exercise to raise funds from the market.
“From 2009 to 2011 we put everything in place – regulations and infrastructure, intermediaries [securities firms], and participants [public investors] – and we also provided the approval to establish the CSX in 2011.
“As the regulator, our challenge now is to list more first-rate companies and bring in genuine investors to the market. We need to have more fund management companies to attract large and small investors.
“Funds from outside need these kind of fund managers to facilitate their investment, currently big funds don’t have direct access to small markets like Cambodia,” Socheat said.
At present six fund managers are operating in the market.
Socheat and his team at the SECC are striving to build Cambodia’s capital market, which, while still at a nascent stage, is crucial for the Kingdom’s growing economy as it is a barometer of the health of the country’s financial sector.
A vibrant capital market also indicates investor confidence – both local and foreign – in a country’s financial ecosystem.
“The capital market is very important to Cambodia. Previously we only had the insurance and banking sectors, but the capital market can support the other markets and make the banking sector stronger and more resilient. When the capital market grows, more people will use our banking system.
“A strong, developed financial market will help in the economic development of our country. When someone wants to see the financial health of a country, they look to the [progress of the] capital market.
“We are still at an infant stage – we only have eight listed companies, while the market is not as active or as liquid as in other countries,” Socheat said.
While it may take time to convince investors, the SECC is confident of building a strong and sustainable capital market.