Stock Market

Cambodia’s Stock Market Share Prices Explained

Experts explain why share prices on Cambodia’s Securities Exchange are failing to rise despite listed companies showing strong financial growth
A person looks at a board of the Cambodia Securities Exchange trading. Kiripost/Siv Channa
A person looks at a board of the Cambodia Securities Exchange trading. Kiripost/Siv Channa

In July 2011, Cambodia opened its stock market in a much-anticipated move that aimed to bring the nation’s financial sector in line with other regional countries.

Ten years on, and growth in the stock market – officially named Cambodia Securities Exchange (CSX) – has been relatively slow. As of today, there are just less than a dozen companies listed. Some experts say investor awareness and the size of the market are to blame.

At a recent business forum hosted by ACLEDA Bank and the Japanese Business Association of Cambodia (JBAC) in Phnom Penh, the question of share prices was raised.

Hiroshi Uematsu, CEO of Royal Group Phnom Penh SEZ, through an interpreter, said both ACLEDA Bank and his company perform well, but asked, “Why does the price of shares not go up on the stock market?”

ACLEDA Bank’s president and group managing director, In Channy, said the country’s stock market has faced some key challenges. Lack of investor education and limited market size are among factors that contribute to the issue of share prices not increasing despite listed companies showing strong business performance.

Cambodia Securities Exchange. Kiripost/Siv Channa
Cambodia Securities Exchange. Kiripost/Siv Channa

Related to the share prices, Channy said ACLEDA Bank experienced the same issue. The bank’s share prices have not increased even though its business performs well.

“I also question myself. Why does the bank perform very well but the share prices remain low?” asked Channy.

Commenting on the share prices of two listed companies, ACLEDA Bank and Royal Group Phnom Penh Special Economic Zone (PP SEZ), CSX’s chief executive officer Hong Sok Hour told Kiripost that the bank started the internal trading of its shares long before their IPO.

The bank’s staff bought shares at lower prices. But, later on, in 2017, the bank was legally required to halt the internal trading of its shares.

“So, when the [ACLEDA] bank became officially listed, some investors who bought shares earlier on at lower prices started to sell their shares en masse to get the money. They did so regardless of how well the [listed] company performs financially,” said Sok Hour.

“Indeed, as we can see, ACLEDA Bank has been doing well in terms of revenue and profit despite competition posed by another rival commercial bank,” he added.

In the case of PP SEZ, Sok Hour said there were some challenges, including the partial removal of EBA from Cambodia and Covid-19, that worried investors.

“[PPSEZ]’s share prices, at one point, went down as low as under 2,000 riel [a share]. The prices have relatively recovered only when Neak Oknha Kith Meng bought majority shares of PPSEZ,” Sok Hour said.

Another key factor, according to Channy, is the real estate sector which has been growing strongly and interested many investors, both domestic and international.

“Investors believe that if they own a piece of land and if they can sell it back, the return is 300 percent or 500 percent. And if they hold the land, they don’t have any obligation to pay any taxes,” Channy said.

“This is also a key influence on investors’ decisions on the stock market,” Channy said.

“If you place fixed deposits with the bank, you pay 6 percent on the interest, but if you own land you don’t need to pay tax. In comparison with the investment in stocks, they expect to have triple or multiple [times] on the return. This is the perception of the investor today and the average Cambodian,” he added.

Toeuy Hong, 29, a company employee in Phnom Penh, bought an undisclosed number of shares in ACLEDA Bank Plc in mid-2021.

He invested in shares because he wanted to earn extra passive income.

“The investment in shares is a long-term one. I don’t expect a quick return,” said Hong.

For Sok Hour, as a strategy, CSX encourages investors to see potentials in the long-run and invest in the long-term.

“Please don’t expect that you buy shares today, and you will reap lots of profit the next day or next week or next month,” said Sok Hour.