ASEAN Markets May Lead Rebound

August 31, 2010
LiveTradingNews.com

USA markets ended a bad month last night. The Dow Jones industrial average was up 4.99 points, or 0.05 per cent, to end unofficially at 10,014.72. The Standard & Poor’s 500 Index was up just 0.41 of a point, or 0.04 per cent, to finish unofficially at 1049.33. But the Nasdaq Composite Index was down 5.94 points, or 0.28 per cent, to close unofficially at 2114.03.

For the month, the Dow fell 4.31 per cent, while the S&P 500 lost 4.75 per cent and the Nasdaq slid 6.24 per cent.

There will be added pressure on regional markets today but we still may see gains as local ASEAN data remains strong and AFTA delivers good prospects for new markets.

The Straits Times Index fell 6.73 points to close at 2,950.33.

Volume was 1.67 billion shares.

Losers led gainers 329 to 149.

City Developments declined 4.5 per cent to S$10.94, CapitaLand was down 1.8 per cent at S$3.91, CapitaMall Trust gained 1.6 per cent to S$1.94 while CapitaMalls Asia was up 1.0 per cent at S$2.10.

Olam International fell 1.84 per cent to S$2.67, Wilmar International was flat at S$6.26, while Golden Agri-Resources rose 0.9 per cent to S$0.56.

Singapore banks are the top three safest banks in Asia, according to the Global Finance magazine in its October 2010 issue.

DBS Bank clinched the top spot for the second year. OCBC took the second while UOB ranked third.

Globally, DBS Bank was ranked the 23rd safest bank, up one notch from 24th place last year.

OCBC was 31st while UOB was 32nd.

Global Finance said the banks were selected through a comparison of their long-term credit ratings and total assets of the 500 largest banks around the world.

It used ratings from Moody’s, Standard & Poor’s and Fitch.

Global Finance publisher Joseph D Giarraputo said banks that have strengthened their liquidity positions and the quality and quantity of their capital are recognised in these rankings.

He added that more than ever, customers around the world are viewing long-term creditworthiness as the key feature of the banks with which they do business.

This is on the back of the sovereign debt crisis in Europe and renewed concerns about the global economic outlook, which once again put the spotlight on bank safety.

United Overseas Bank shed 0.85 per cent to S$18.72.

In the Philippines the local Stock Exchange index gained 7.47 points or 0.21 percent to close at 3,566.23.

The mining/oil counter was the day’s most active, rising 2 percent on the back of gains by Philex Mining Corp. on expectations that the company might gain a foothold in the $5.2-billion gold and copper mine in South Cotabato.

The financial, industrial and holding firm counters were mildly up, taking up the slack in the property and services counters.

There were 70 advancers and 60 decliners while 33 stocks were unchanged. Value turnover was extraordinarily high at P14.6 billion due to two large block sales of Petron Corp.

Aside from Philex, among the day’s gainers were banking giant Metrobank, Metro Pacific Investments Corp., Universal Robina, JG Summit, Ayala
Corp., Lopez Holdings, First Philippine Holdings Corp., Energy Development Corp., Semirara Mining Corp., SM Investments and Globe Telecom.

The local stock market managed to post slim gains despite the bloodbath in Wall Street on Friday. The Dow Jones Industrial Index was down 140.92 points or 1.39 percent to 10,009.73.

In the next few sessions, however, dealers expected the market to enter a consolidation phase.

Shayne Heffernan looks at the days trading in Jakarta: The Jakarta Composite Index lost 17.68 points, or 0.6 percent, to close at 3,081.88. Some 4.2 billion shares worth Rp 3.7 trillion ($391 million) changed hands. Decliners outnumbered gainers 132 to 58.

Overall confidence in Indonesia led to a burst of late bargain buying limited the losses, after the JCI was down 35 points in the late afternoon.

Among decliners were energy companies such as Adaro Energy, Indonesia’s biggest listed coal producer by market value, which tumbled 4 percent after reporting on Monday that first-half net income fell 49 percent to Rp 1.2 trillion as coal prices fell and the rupiah strengthened.

Medco Energi Internasional, the country’s biggest listed oil company, slid 0.8 percent.

Bakrie Group coal miner Bumi Resources fell 2.9 percent after it reported first-half net income declined 30 percent to $134.6 million as interest costs increased and it paid higher taxes.

Financial stocks outperformed. Bank Mandiri rose 1.5 percent, while Bank Negara Indonesia advanced 1.7 percent.

Meanwhile, the rupiah fell 0.4 percent to post a decline for the month of August, halting a two-month winning streak as signs the global economic recovery is faltering damped demand for emerging-market assets.

The currency slumped for only its second month in a year, dropping 1.1 percent.

The rupiah was at 9,048 to the dollar as of the stock market’s close. It was the third-worst performer in August among Asia’s 10 most-traded currencies, after India’s rupee and South Korea’s won.

“There was modest weakness across some Asian currencies in August due to global growth concerns, especially as the US data is getting weaker,” said Thomas Harr, Singapore-based Asia foreign-exchange strategy head at Standard Chartered. “There’s nothing really Indonesia-specific that is driving the rupiah lower.”

Losses in the currency were limited as funds based abroad plowed money into Indonesian securities in August. Overseas investors bought $246 million more local shares than they sold, boosting net purchases for the year to $1.6 billion.

Analysts expect the central bank to keep interest rates unchanged at a meeting this week to support growth, even as a government report today may show inflation has accelerated to the fastest pace since April 2009.

According to economists’ estimates, annual inflation rose to 6.7 percent in August from a year earlier, after climbing to 6.22 percent the previous month. The government inflation report is due today. Bank Indonesia will keep its policy rate at 6.5 percent when it meets on Friday, according to a separate survey.

Harr said the higher inflation data should have a limited impact on the rupiah as the central bank was expected to raise its policy rate in the fourth quarter. Standard Chartered was sticking with a forecast that the currency would rise to 8,800 by the end of the fourth quarter, he said.

The currency will gain to 8,900 by year-end, according to the median estimate of economists.

The Stock Exchange of Thailand (SET) composite index closed down 1.61 points to close at 908.04 points at the end of trading session on Tuesday morning. The trade value was 23.56 billion baht.

Siam Cement Group (SCG), Thailand’s top industrial conglomerate, wants to establish a global presence for its SCG and COTTO brands of building materials starting in Asean.

Currently, Vietnam is considered the first strategic country for the move to establish the international recognition of its SCG brand for construction products and COTTO brand for sanitary ware including tiles and faucets.

Other countries in Indochina, including Burma and Cambodia, as well as the Philippines, are the next targets of Siam Cement’s Brand Management Office, which is tasked with increasing the awareness of the brands in the domestic and overseas markets.

“The move is expected to further strengthen our leadership in both the construction and sanitary ware markets,” said brand director Anuvat Chalermchai.

Operating under SCG Building Materials Co, the Brand Management Office has been allocated a budget of 200 million baht this year for strategic planning and brand management mostly for the Thai markets. Unlike overseas markets, construction products are grouped under the “Chang” brand for domestic sales.

The budget will be increased next year for greater coverage in Asean.

“SCG has campaigned through corporate social responsibility (CSR) activities in Vietnam over the past few years and they know SCG as a corporation. Now it is time to make the Vietnamese consumers aware that we have products available for them to buy,” Mr Anuvat said.

“At present, the brand awareness of SCG and COTTO is minimal abroad even though a significant portion of our cement and up to 40% of our sanitary ware are exported. This is partly due to strong competition from major local players in each Asean market and the existence of international operators such as France’s Saint Gobain and Switzerland-based Holcim,” he added.

“We want significant brand awareness in Asean by 2015, when SCG aims to become a major regional business leader,” said Mr Anuvat.

“Our prime targets include Indochina and other markets in Southeast Asia, especially Malaysia, Brunei, the Philippines and Indonesia,” he added.

Besides, the Brand Management Office also looks beyond the Asean markets.

“We believe the SCG and COTTO brands have the potential in the global market. That’s why the office was established and we will put our efforts to achieving this target,” he added.

Shares of SCG (SCC) closed on the SET at 272 baht, up four baht, in trade worth 1.47 million baht.

For 2011, Robinson is planning to open three new branches in Chiang Rai, Phitsanulok and on Rama IX road in Bangkok with a full-year investment budget of 1.2 billion baht, including 200 million to renovate existing stores.

Capital investment is expected to rise to 1.4 to 1.5 billion baht per year over the next three years, with the company investing from 300 to 600 million baht per new branch.

“By 2012, we expect to have 29 stores in operation. We will use existing cash flow for financing new investment. We have EBITDA (earnings before interest, taxes, depreciation and amortisation) of around 2 billion baht [per year],” Mr Preecha said.

The company will focus its expansion upcountry to reduce its risk to political unrest in the capital and target growing household income in the provinces.

Robinson reported first-half total revenue of 7.96 billion baht, a 21.2% increase from the same period last year. Net profit rose 109% year-on-year to 1.07 billion baht for the first six months of the year. First-half sales revenue rose 16.3% year-on-year to 6.9 billion baht.

Second-quarter sales revenue rose 15.2% year-on-year to 3.38 billion baht, with net profit up 30.5% to 304 million.

Top five most active values were as follows;

KTB closed at 13.80 baht, up 0.60 baht (4.55%)
TMB closed at 2.68 baht, up 0.06 baht (2.29%)
SCC closed at 287.00 baht, up 9.00 baht (3.24%)
BLAND closed at 1.02 baht, down 0.02 baht (1.92%)
BAY closed at 21.30 baht, up 0.20 baht (0.95%)

Shayne Heffernan www.livetradingnews.com

Samart seeking partner for Cambodia air-traffic venture

Burma and Laos expansion targets

24/05/2010
Srisamorn Phoosuphanusorn
Bangkok Post

Samart Corporation, the country's leading communications equipment firm, is in negotiations with a few prospective foreign partners for a joint venture in its air traffic management services in Cambodia.

The strategic move is in preparation for listing its Cambodia Air Traffic Services (CATS) Co on the local stock market to raise capital by the end of this year.

The wholly owned subsidiary of Samart is also moving aggressively to expand its air traffic control services into Burma and Laos this year to increase overseas revenue.

Watchai Vilailuck, the president of Samart Corp, said three to four potential air traffic management companies in Europe have expressed interests to purchase shares in CATS for a partnership. He declined to specify names but said the firms are the world's leading business scale.

"A conclusion is expected to be settled soon. We would limit the maximum foreign shareholding at 40% in CATS," he said in an interview.

Mr Watchai said seeking a strategic partner was primarily intended to further expand business into other countries and develop business portfolio.

Listing CATS on the fledgling Cambodian stock exchange, meanwhile, is aimed at increasing liquidity, broadening service availability in the market and enhancing its financial standing. It also gives investors in Cambodia an opportunity to acquire shares in the company.

The proceeds from the listing would be used for business expansion and development, he added.

Mr Watchai said air traffic control service was a cash cow for Samart, thanks to its sustainable long-term growth in revenue and profit.

The company had already reached the break-even point after a one-time investment of $30 million during the startup, he added.

CATS was granted an exclusive 32-year licence by the Cambodia government under a build-operate-transfer agreement to develop and operate the entire civil air traffic control and navigation system in Cambodia.

CATS posted $3 million in net profit in 2009. The company earned US$23.07 million in revenue last year, compared with $12.6 million in the first year of its licence in 2002. Its first-quarter revenue this year was $6.27 million.

The company managed 47,476 flights last year, compared with 31,425 flights in 2002. The flight number in the first quarter of this year totalled 12,724.

Mr Watchai said CATS expected revenue to grow by 10% this year, thanks to a recovering global economy and a surge in tourist numbers in Cambodia.

The company is spending $7 million to expand its radar system and navigation platform in Sihanu city to broaden its service network.

CATS now operates air traffic control services at domestic and international airports in eight cities in Cambodia.

"We are looking to expand our air traffic control service in other countries in Indochina to increase revenue from overseas businesses," Mr Watchai said.

Cambodian PM names 3 likely listings on new bourse

PHNOM PENH, Feb 3 (Reuters) - Prime Minister Hun Sen said on Wednesday three state firms could be among the first to list on Cambodia's new stock market, although an official involved in the project said it may not be ready until the end of the year.

"Our Cambodia is creating a stock market, its headquarters are almost finished," Hun Sen told more than 1,000 accountancy graduates in Phnom Penh.

"So, in a short time, we will have a stock market, and some state firms and private enterprises will get listed there."

Hun Sen mentioned three candidates for a listing -- Sihanoukville Autonomous Port, the Phnom Penh Water Supply Authority and Electricite du Cambodge, the state power company.

The finance ministry has previously suggested the port operator, the water utility and Telecom Cambodia, the national phone company, could seek a listing.

The exchange will be in a new financial district being built by South Korean-backed World City on the outskirts of Phnom Penh, the capital of the Southeast Asian country.

It was supposed to open in September 2009. When that date passed, government officials mentioned January or February as a possible start date for trading, even if the headquarters wasn't fully ready by then.

Ming Bankosal, director general of the Securities Exchange Commission of Cambodia, told Reuters on Wednesday the bourse would probably be up and running at the end of this year, adding that some regulatory laws had already been drawn up.

"We planned to operate at the end of 2009 but the situation was not fruitful. The economic crisis also affected us," Ming Bankosal said.

"We would rather be late than have it one or two years and then it collapses," he said.

"We plan to open it at the end of the year but that will depend on whether companies are ready," he said, adding Cambodian firms would need to be more transparent.

Ming Bankosal said some private companies had expressed an interest in listing shares, but he declined to name them. Financial companies have until March 1 to submit applications to operate as underwriters, brokers, dealers and investment advisers.

(Reporting by Prak Chan Thul; Editing by Alan Raybould)

Cambodia's stock market is no quick fix

16-12-2009
By Bruce Gale, Senior Writer
The Straits Times

Given Cambodia's reputation for shady dealings, foreign investors are likely to remain wary for some time. Junk-level credit ratings also suggest the country is a risky bet.

Weak oversight and neglect of real economy are potential dangers

IS CAMBODIA in danger of developing a taste for quick fixes? A statement issued by the nation's Finance Ministry earlier this month called the establishment of a stock exchange 'an important and historic event' that will create new jobs, revitalise the local economy and transform Phnom Penh into 'a world-class city'.

Until recently, 'offshore oil' was what officials touted as the country's way out of dire poverty. But since it is still not clear when the oil will be commercially viable, the government has begun looking elsewhere.

After numerous delays, Cambodia's stock market is now set for launch around November next year. This is the date when the exchange's building is expected to be completed in Camko City, a major new development just north of central Phnom Penh.

Official concern about the need to boost the economy is understandable. The International Monetary Fund expects the economy to contract by 2.75 per cent this year. By comparison, the economy expanded by 10.25 per cent in 2007 and about 6.5 per cent last year.

Despite the rapid growth of recent years, about 40 per cent of Cambodians still live below the poverty line. The country remains heavily reliant on international aid.

The planned stock exchange, however, will not be for the faint-hearted. Despite all the talk about the importance of regulation, the new bourse is widely expected to reflect Cambodia's penchant for weak oversight. As a Cambodian opposition leader, Mr Sam Rainsy, put it: 'Many potential stock holders will be cheated by stock manipulation.'

Cambodia is regularly listed by Transparency International as one of the most corrupt countries in the world.

Cambodia's Finance Ministry has asked state companies such as Telecom Cambodia, port operator Sihanoukville Autonomous Port and the Phnom Penh Water Supply Authority to list shares. Other companies that are expected to list within a year of the exchange opening for operations include petroleum company Sokimex and the country's largest bank, Acleda Bank Plc. The government is also considering a range of tax incentives to encourage companies to go public.

According to the Korea Exchange, which is providing technical advice on the establishment of the new Cambodian bourse, each company will probably issue about US$10 million (S$14 million) worth of shares initially.

One of the main justifications for the establishment of the exchange is the need to mobilise funds from outside the banking system. Cambodia is a largely cash-only economy. This is because citizens distrust the banks and prefer to hoard their money at home.

With limited deposits, banks are unable to lend large amounts for long periods. Companies that wish to borrow funds for expansion also face high interest rates. The hope is that the proposed stock market will provide such companies with an alternative means of raising capital.

In addition, by forcing companies which want to list on the exchange to publish audited accounts, it is argued that the bourse could go a long way towards forcing greater transparency on the local corporate scene.

Supporters have also cited the stock market as a possible source of additional foreign investment. Despite the progressive easing of official restrictions, Cambodia lags far behind neighbouring Vietnam in terms of its ability to attract foreign investors.

But creating a stock market is unlikely to be an economic quick fix. Indeed, the reality is likely to be far more prosaic than that suggested by the official hyperbole surrounding the establishment of a stock market.

Given Cambodia's reputation for shady dealings, foreign investors are likely to remain wary for some time. Junk-level credit ratings also suggest the country is a risky bet.

It will also be a while before the bourse is able to deliver on its promise to provide a much-needed alternative source of funds. After all, the move will mainly benefit the nation's larger companies, most of whom have much less problem obtaining capital than small and medium-sized enterprises.

One worrying possibility is that the nation's political and economic elite will become so distracted by the opportunities the new institution may provide for quick profits that they neglect the needs of the real economy.

If the new institution is well run, however, there are some grounds for optimism over the medium and long term. Vietnam's bourse, which was set up in July 2000, languished for several years before taking off in 2007. Cambodia's exchange may follow a similar course.

Cambodia has much potential. For some years now, it has no longer been necessary for economic policy to take a back seat to security issues. As a result, the private sector has begun to flourish.

The garment industry in particular survived the end of the Multi-Fibre Agreement, and employs large numbers of rural-urban migrants. Prior to the recent global slowdown, Western investors were also beginning to show greater interest in the country.

It is matters such as these - together with the official attitude towards the promotion of good governance - that will ultimately determine whether the revitalisation the country's economic managers crave will actually come to pass.

Cambodia says new bourse will start trading soon

By Ek Madra

PHNOM PENH, Dec 2 (Reuters) - Cambodia's long-awaited stock exchange could start operating next month, a government official said on Wednesday, after signing a deal with South Korean developer World City Co Ltd to build the $6 million bourse.

Although construction of the new stock market will not be completed for at least eight months, trading will begin in a temporary venue as soon as possible, said Mey Vann, director of the government's finance industry department.

"It has been too long already. We don't have to wait until the construction is complete," Vann told Reuters. "We will begin our operation in January or February next year."

The idea of a Cambodian stock market has been floated since the 1990s but has struggled for traction in a country better known for a culture of political impunity, chronic poverty and a history of violence, including the Khmer Rouge "Killing Fields".

There have also been concerns that Cambodia is trying to move too fast and is not yet ready to have its people to invest in stocks, with big risks to largely inexperienced local investors in a country still blighted by corruption and mismanagement.

The four-storey venue will be built on 6,000 square metres (64,580 sq ft) of former marshland on the northern outskirts of the capital, Phnom Penh, and the design will reflect both Khmer and South Korean cultures.

Vann said the stock exchange would be housed temporarily in the Ministry of Economy and Finance until construction of the bourse was completed.

The exchange expects to start small with just four or five companies issuing about $10 million worth of shares each, according to Korea Exchange, Asia's fourth-largest bourse operator, which will own 49 percent of the new exchange.

Cambodia's Finance Ministry has given priority to state companies to sell stocks and has asked Telecom Cambodia, port operator Sihanoukville Autonomous Port and the Phnom Penh Water Supply Authority to list shares.

(Writing by Martin Petty; Editing by Alan Raybould)

Construction of Cambodian bourse to begin in Dec

By Ek Madra

PHNOM PENH, Oct 31 (Reuters) - Cambodia expects to begin construction in December on its first stock exchange, a government official said, giving momentum to a long-delayed joint venture with South Korean investors.

'We expect to have the ground-breaking ceremony in December,' Mey Vann, director of the financial industry department at Cambodia's Ministry of Economy and Finance, told Reuters.

The idea of a Cambodian stockmarket has been floated since the 1990s but has struggled for traction in a country known for chronic poverty and a history of upheaval, including the Khmer Rouge 'Killing Fields'.

Cambodian authorities have partnered with private South Korean developer World City Co Ltd to build a $6 million, four-storey stock exchange on the waterfront of a new financial district, Cambodian and World City officials have said.

The area where the stock exchange will be built is flooded swampland on the edge of Boeung Kak Lake in the heart of the Phnom Penh. The end of the rainy season this month will clear the way for workers to begin building the exchange on the corner of what developers are calling Phnom Penh Boulevard.

'The site is under a flood these days. We are pumping the water from the site,' said Vann, adding he expected construction to take between eight months and one year.

The bourse was supposed to open in September, a target set last year when South Korea's stock exchange operator agreed with the Cambodian government to set up and run a joint stock exchange.

But the global financial crisis intervened, ending an unprecedented boom which saw Cambodia's economy expand 10 percent annually in the five years up to 2008. Foreign investment collapsed, tourist arrivals fell by double digits and garment exports, a mainstay of the economy, shrank by 15 percent.

Cambodian officials rejected an initial design, saying the exchange's exterior was too modern and not Cambodian enough. It has since been redesigned using traditional Khmer accents.

'We are still working on finalising the design of the exchange building,' said Vann. 'We'd like to have a mixed design which shows both the culture of Cambodia and Korea.'

Korea Exchange, Asia's fourth-largest bourse operator, will own 49 percent of the exchange and is recruiting and training workers for it. Cambodian will own the rest.

Cambodian officials have cautioned against moving too fast, in some cases questioning whether a country whose education system was decimated during Pol Pot's 1975-79 reign of terror is ready to invest in stocks.

'We are going to launch a public awareness campaign about our stock market next month,' said Vann.

The exchange expects to start small with just four or five companies issuing about $10 million worth of shares each, Intyo Lee, project director for Korea Exchange, said in early October.

That's comparable to neighbouring Vietnam's first stock market launched in 2000 with its initial market capitalisation of $43 million. Today, Vietnam's market is worth $27 billion.

(Writing by Jason Szep, Editing by Dean Yates)

Seaweed Company Delays Share Sales

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
07 October 2009

A Malaysian seaweed company has delayed a scheme to sell shares to Cambodians after warnings from the Security Commission of Cambodia the plan could be illegal.

FMCB Services, Bhd., has invested around $3 million in its Kampot province facility so far this year, with plans to export seaweed to US, where it can be packaged as food or used in cosmetics. Seaweed is also popular in European, Japanese, Chinese and Korean markets.

“We haven’t sold any shares so far,” Mei Ratha, FMCB’s Cambodian representative, told VOA Khmer. “Now we need to ask the [SCC] first, and we will decide to sell again only if we are allowed to do so.”

The company has 60 hectares of sea area, with a plan to increase to 10,000 hectares, which would demand raising capital between $30 million to $40 million. They had planned to sell shares for $300 per share, with promises of high returns: 30 percent the first year, 50 percent the second year and 75 percent the third year.

Mei Ratha said his company would cancel the sales if they are illegal.

“We need to wait and see,” he said. “If the government allows it and it is legal, we will sell. But if it is illegal, we won’t do it. We’ll forget about it and use our own money instead.”

Soon after FMCB announced the selling of shares, the securities commission, which is responsible for Cambodia’s nascent securities market, took measures to interrupt the process.

“We will invite them to clear out the issue,” said Minh Ban Kosal, secretary-general of the commission. “We will see if it is a desire or confusion.”

Public offerings are so far not legal in Cambodia, he said, and the company does not appear on the business listing of the Ministry of Commerce.

In order to sell shares, companies must be listed on the stock exchange, he said. The exchange is scheduled to open at the end of the year.

Korean Securities Firm Ready for Bourse

By Ros Sothea, VOA Khmer
Origial report from Phnom Penh
23 June 2009

Tong Yang Securities is the only company that has so far opened for business in anticipation of a stock exchange that officials hope to have up and running by the end of the year.

“We came to Cambodia with a long-term perspective,” the company’s chief representative, Han Kyung Tae, told VOA Khmer. “We are ready to start our business.”

Tong Yang, a financial service provider in South Korea that set up here in 2006, hopes to offer security brokerage, stock deposits, subscription and sale of securities, merger and acquisition brokerage, bond issuance and discretionary investments.

“We are right now working with a couple of state-owned companies and a couple of private companies who might be listed on the stock exchange,” Han said.

Cambodia has said it will have its exchange up and running in December 2009, despite the global downturn and with the aid of South Korea.

Han said his company had been waiting for an official license to extend its business roles, such as broker and dealer, and to establish a private equity fund.

In South Korea, Tong Yang charges from 3 percent to 5 percent of the capital it earns trading bonds or shares. Han said he was not sure what commission the company will take in Cambodia.

Stock trading partly depends on security firms or investment banks. It also requires economic stability, a system of laws and strong companies listed on the exchange.

Vietnam’s stock exchange was established with only a few companies, Han said. But a decade later, more than 400 companies were listed. After 20 years, China’s stock market lists 4,000 companies.

In Cambodia, meanwhile, securities experts have estimated around 40 companies will be listed, while their earning potential remains to be seen.

“It depends on competition, the size of business,” Han said. “If competition becomes tougher in the investment banking business in Cambodia, which has a small size of economy, we will face difficulties in pursuing profit.”

Han also warned that if smaller securities firms are approved, the bigger ones will not enter Cambodia’s market.

Sam Ganty, a member of the government’s Securities and Exchange Commission, has said that bigger investment banks have more influence than smaller ones.

They might be stronger, have more experts, and a network of potential investors, he recently told VOA Khmer.

SEC President Minh Ban Kosal said that so far 10 securities firms are waiting to apply for business licenses.

The commission will carefully select the firms with minimum capital fit to its national economy, he said, adding that firms will be able to apply for licenses starting in August.

Khmer Intelligence News - 21 February 2009

21 February 2009

A new Phnom Penh Governor in May (2)

The CPP has named current Phnom Penh Governor Kep Chuktema its top-of-the-list candidate for the Capital City Council election to be held on May 17, 2009. Kep Chuktema will then become President of the to-be-formed CCC, a position incompatible with that of Phnom Penh governor. This governor position will be given to Hun Neng, an elder brother of Prime Minister Hun Sen and currently governor of Kampong Cham province. There was a foiled plan to appoint Hun Neng Phnom Penh governor in 2004. See "Hun Neng to be appointed Phnom Penh governor" (KI News, 18 August 2004).

Provincial, city and district elections manipulated by CPP (2)

The ruling CPP is using many methods to manipulate the forthcoming provincial, city and district council elections scheduled for May 17, 2009. In those indirect elections, voters are the existing 11,353 commune councilors who were elected in April 2007 in Cambodia's 1,621 communes. The two main competitors are the CPP (7,993 councilors) and the SRP (2,660) while the two "royalist" parties, NRP (425) and Funcinpec (274), will be virtually wiped out given the election system.

The CPP is using against the SRP the following methods to manipulate election results:

• Press politically-motivated charges against SRP councilors, many of whom have been arrested and jailed, thus losing their voting right. The CPP-controlled tribunal has issued arrest warrants targeting several SRP commune councilors including 2 commune chiefs.
• Offer money and well-paid government adviser positions to entice SRP commune councilors to defect to the CPP or to vote for CPP candidates.
• Prevent the SRP from removing its councilors who have defected to the CPP and from replacing them with loyal councilors as legally allowed in the framework of the party list system. The CPP authorities, from the commune office to the Interior Ministry, are stalling any replacement request presented by the SRP, whereas the CPP is able to change any of its councilors within days.

IRI poll: most CPP voters actually have no political preferences (2)

By the end of 2008, the Washington-based International Republican Institute conducted an opinion poll, with one of the questions asked being the following: "What differences do you see between the major parties that competed in National Assembly elections?"

The answers were as follows:

• No differences: 33%
• Don't know: 22%
• Gifts they give: 8%
• There are differences but cannot specify: 4%

Therefore, 67% of voters do not have any real political preferences. This group of voters mainly voted for the CPP in past elections, only seeking to be on the safe side (because of intimidation) or to receive gifts (because of extreme poverty), whereas the remaining 33% voters are more politicized and more politically determined and they mainly voted for opposition parties.

At the July 2008 national election, the CPP collected 58% of the votes (mainly from the 67 % less politicized voters), whereas the SRP and the HRP obtained respectively 22% and 6% of the votes (mainly from the 33% more politicized voters).

One can see that the CPP political base is not that strong since the ruling party's propaganda themes (7th January, protection against the Khmer Rouge, peace, "development", Hun Sen's role, etc) do not hold sway in the people's mind.

South Korea, a bad teacher for stock exchange investments (2)

On February 20, Cambodia's Finance Ministry was forced to postpone the signing of a joint venture agreement on the new Phnom Penh stock exchange to be launched by the end of the year. The reason for the postponement was the fact that the Korean adviser and partner who was supposed to cosign the agreement in his capacity as CEO of the South Korea Stock Exchange, did not show up. Maybe, it was a blessing in disguise because South Korea Stock Exchange was NOT the place to invest in during the past 2 years: since 2007 a foreign investor with Korean stocks has seen the value of his assets reduced by 80 percent (stock prices in Seoul went down by 50 percent and the Korean currency, the won, fell by 30 percent against the US dollar). See also "Foreign brokerage firms will be allowed to operate in Cambodia" (KI News, 27 September 2007) and "No stock market in Cambodia in a foreseeable future" (KI News, 31 January 2007).
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ARCHIVES

27 September 2007

Foreign brokerage firms will be allowed to operate in Cambodia (1)

On September 12, 2007, the National Assembly passed a law that lays the ground for the creation of a Stock Exchange in Cambodia. Many serious problems have to be solved before a real Bourse can be set up in this country (KI News, 31 January 2007: "No stock market in Cambodia in a foreseeable future"). During the parliamentary debate, opposition leader and former Finance Minister Sam Rainsy, who had been a security analyst and a portfolio manager in Europe for twenty years, stressed that the Government will have to be strict to ensure that listed companies release accurate information to prevent the public from being cheated. He obtained the assurance from the Government that foreign brokerage firms will be allowed to do business in Cambodia in order to help our future Stock Exchange meet international standards in due course.

See financial model for stock evaluation developed by Sam Rainsy at http://tinyurl.com/yvzvxg

31 January 2007

No stock market in Cambodia in a foreseeable future (2)

Contrary to several official announcements in a recent past, Cambodia will not be able to set up any stock market in a foreseeable future. Even the South Korean companies the Cambodian authorities had strongly hoped that they would help establish a Bourse in Phnom Penh, have given up the idea because there is no reliable accounting system in Cambodia. Any listed companies would have to present credible financial statements and records over several consecutive years, which is virtually impossible to obtain in a country plagued with corruption and lawlessness.

18 August 2004

Hun Neng to be appointed Phnom Penh governor (3)

Prime Minister Hun Sen's eldest brother Hun Neng, currently Svay Rieng provincial governor, will replace Kep Chuktema as Phnom Penh Municipality governor in September or October this year. Kep Chuktema will take up the current position of Hun Neng.

Cambodian stock exchange plans criticised

17/09/2007
Australian Broadcasting Corporation

Cambodia's opposition leader says the country isn't ready for a planned stock exchange, and ordinary investors will end up losing out.

The Cambodian government says it wants an exchange set up within two years, and has enlisted help from South Korea.

Opposition leader Sam Rainsy has told Radio Australia's Connect Asia program he is concerned about the transparency of the stock exchange.

"As long as we don't ensure the rule of law, as long as we don't really fight against corruption, any stock exchange in Cambodia will not function properly," he said.

Brett Sciaroni, chair of the American Cambodian Business Council, says the passage of anti-corruption legislation should not hold up development of a local securities market.

And he argues that if done correctly, the introduction of a stock exchange will inevitably lead to greater transparency from local businesses.

"There'll be a trade off - they'll have to disclose what they're doing," he said.

"So they'll see the trade-off between the need for capital and disclosure of information which has heretofore been held pretty closely."

Political Cartoon: Hun Xeng, Xmer's Stock Market

South Korea to help Cambodia set up stock market

Cambodia's Prime Minister Hun Sen speaks during the launching of Cambodia Securities Market Project at a hotel in Phnom Penh September 6, 2007. REUTERS/Chor Sokunthea

PHNOM PENH, Sept 6 (Reuters) - South Korea has agreed to help Cambodia set up a stock exchange, the latest sign of the Southeast Asian nation's recovery from the devastation of Pol Pot's "Killing Fields".

Seoul would spend $1.8 million on training and help set up the technology of the modern stock market Cambodia planned to open in 2009, Prime Minister Hun Sen said on Thursday, three months after announcing the country would set up a bourse.

Young-Tak Lee, chairman of the Korean Exchange (KRX), said the assistance would include helping establish rules and regulations as well as the technological side.

"It is necessary to foster the growth of domestic securities companies and prevent the market dominance by the foreign investors and securities companies," Lee said in a still poor country where a 30-year civil war ended only in 1998.

"We expect to see the grand opening of the Cambodia securities market in the second half of 2009," he said.

South Korea is a leading investor in Cambodia and a group of its investors plan to build a $2 billion new city near Phnom Penh to include a financial centre.