Stock market launch beset by apathy, crisis: experts

Written by SOEUN SAY

Tuesday, 30 December 2008

With the opening of the stock exchange approaching, local experts ask whether the public has any interest in investing in a market they don’t understand AFP Construction at the soon-to-be-home of Cambodia’s stock exchange, scheduled to open in September.

INDEPENDENT economists last week lowered their expectations over the launch of Cambodia's stock exchange, saying the risks inherent to the Kingdom's investment climate and a lack of public interest could undermine the proposed September opening.

Kang Chandararot, an economist and president of the Cambodia Institute for Development Study, expressed doubts over the government's ability to meet its deadline for the index, but said public confidence would ultimately dictate its success or failure. "If they don't [generate] public confidence in the stock market, they will take a huge risk," he said of the exchange's organisers.

A worsening economy and a sluggish property market have likely eliminated much of the potential investment capital people could have otherwise used for the stock market, Kang Chandararot said.

He added that instilling public confidence in the stock market could be difficult when the government has yet to follow through on other responsibilities.

"How can [people] want to buy shares in a stock market if the government has left so many other things undone?" he asked.
Economist Chap Sotharith echoed Kang Chandararot's concerns, but said that the government faces a more fundamental challenge with the index.

"If the government manages to open the exchange, they will still face the fact that Cambodian people don't understand it and will not invest because they have no faith in stocks," he said.

Chap Sotharith added, however, that a successful launch of the stock market could help stimulate Cambodia's economy. He called on the government to better educate the public and encourage more people to use banks, while continuing to attract foreign investors.

Government committed
Finance Minister Keat Chhon said the government remains committed to a September launch of the stock market.
While acknowledging that the slowdown has raised questions about the viability of the exchange, he said the project would survive.

"We will not rush to establish the stock exchange, but we will build a strong base," Keat Chhon told reporters in October.
He added that the establishment of the stock market would help Cambodia develop additional financial resources to boost economic growth.

Hang Chuon Naron, secretary general at the Ministry of Finance, said the stock market would progress according to the government's long-term financial vision for the country and would not be vulnerable to global market instability.

"We hope the stock exchange will provide long-term financial [growth] compared to what we have relied on in the past, such as banks, national budgets, foreign aid and investment," he said. "I think in five or 10 years, the stock exchange will play a key role in strengthening Cambodia's financial sector, but we must proceed carefully to build trust," he said.