Cambodia stock exchange gets second listing

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CSXThe number of companies on Cambodia’s stock exchange doubled on June 16 – to two. The debut by a Taiwan garment maker is an important step for the bourse, but the firm’s long road to listing and a lack of clarity on the number of companies to follow underscore just how far Cambodia has to go before it becomes a hot frontier market, Reuters reported.

While neighbouring Vietnam has seen around 660 companies go public since the opening of its first bourse in 2000, both Cambodia and Laos, which has three listed firms, have failed to live up to early expectations that came when their exchanges opened for business in 2011.

Many Cambodian firms are unwilling to commit to transparency by providing financial statements or to comply with taxation laws, brokers and investors in the country say. Red tape and listing rules more suited to a developed market only compound the problem.

“We find it a very bureaucratic market to invest in, and they are shooting themselves in the foot with listing requirements that are too strict,” said Thomas Hugger, manager of the Asia Frontier Capital fund.

That the newly listing company – Grand Twins International (Cambodia) Plc, a major clothing manufacturer in the country – is not Cambodian but Taiwanese only serves to highlight local corporate reluctance. As does the two-year gap since Cambodia’s first listing.

Grand Twins, which counts Adidas and Reebok among its clients, had initially planned to list last year. It says it decided it would fare better in Cambodia where the textile industry is a pillar of the economy rather than electronics-focused Taiwan.

But its $19 million IPO was pushed back due to delays in getting paperwork done – a problem which resurfaced even after the offering was completed with its listing date postponed twice, sources with direct knowledge of the matter said.

Companies planning to list must provide three years of financial statements, have made a profit for three years and fulfil potentially onerous requirements to have a variety of shareholders.

The Cambodia Securities Exchange, a joint venture with Korea’s bourse, initially announced plans to list three state-owned companies by the end of 2012 but so far only the Phnom Penh Water Supply Authority has made it to market.

And there is not a whole lot of turnover, with no shares changing hands in one in three trading days last month. The trading floor was empty and computers sat switched off when a Reuters reporter visited in June.

While some 100 people, mostly media, were in attendance for the ringing of the bell for Grand Twins, it was a subdued debut with the stock falling 5 per cent in extremely thin trade.

Hong Sok Hour, CEO of the exchange, has said around 10 companies are exploring a listing and there would likely be one more before the end of the year, but noted preparing financial statements continued to be a challenge.

“We can’t know when they are ready,” he told a news conference earlier in June.

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Reading Time: 2 minutes

The number of companies on Cambodia’s stock exchange doubled on June 16 – to two. The debut by a Taiwan garment maker is an important step for the bourse, but the firm’s long road to listing and a lack of clarity on the number of companies to follow underscore just how far Cambodia has to go before it becomes a hot frontier market, Reuters reported.

Reading Time: 2 minutes

CSXThe number of companies on Cambodia’s stock exchange doubled on June 16 – to two. The debut by a Taiwan garment maker is an important step for the bourse, but the firm’s long road to listing and a lack of clarity on the number of companies to follow underscore just how far Cambodia has to go before it becomes a hot frontier market, Reuters reported.

While neighbouring Vietnam has seen around 660 companies go public since the opening of its first bourse in 2000, both Cambodia and Laos, which has three listed firms, have failed to live up to early expectations that came when their exchanges opened for business in 2011.

Many Cambodian firms are unwilling to commit to transparency by providing financial statements or to comply with taxation laws, brokers and investors in the country say. Red tape and listing rules more suited to a developed market only compound the problem.

“We find it a very bureaucratic market to invest in, and they are shooting themselves in the foot with listing requirements that are too strict,” said Thomas Hugger, manager of the Asia Frontier Capital fund.

That the newly listing company – Grand Twins International (Cambodia) Plc, a major clothing manufacturer in the country – is not Cambodian but Taiwanese only serves to highlight local corporate reluctance. As does the two-year gap since Cambodia’s first listing.

Grand Twins, which counts Adidas and Reebok among its clients, had initially planned to list last year. It says it decided it would fare better in Cambodia where the textile industry is a pillar of the economy rather than electronics-focused Taiwan.

But its $19 million IPO was pushed back due to delays in getting paperwork done – a problem which resurfaced even after the offering was completed with its listing date postponed twice, sources with direct knowledge of the matter said.

Companies planning to list must provide three years of financial statements, have made a profit for three years and fulfil potentially onerous requirements to have a variety of shareholders.

The Cambodia Securities Exchange, a joint venture with Korea’s bourse, initially announced plans to list three state-owned companies by the end of 2012 but so far only the Phnom Penh Water Supply Authority has made it to market.

And there is not a whole lot of turnover, with no shares changing hands in one in three trading days last month. The trading floor was empty and computers sat switched off when a Reuters reporter visited in June.

While some 100 people, mostly media, were in attendance for the ringing of the bell for Grand Twins, it was a subdued debut with the stock falling 5 per cent in extremely thin trade.

Hong Sok Hour, CEO of the exchange, has said around 10 companies are exploring a listing and there would likely be one more before the end of the year, but noted preparing financial statements continued to be a challenge.

“We can’t know when they are ready,” he told a news conference earlier in June.

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