The Cambodian stock market performed well in the first quarter. Amidst the decline of most industries, a group of companies stood alone and grew against the trend. Why did the Cambodian stock market achieve such a result?
The financial industry is most favored by foreign capital
The Cambodian financial industry has always been loved by foreign investors and has been the first in all industries to receive foreign direct investment in recent years. According to information from the Central Bank of Cambodia, the manufacturing industry was still in command in 2014 and 2015, receiving the most funds from the net FDI inflow industry, but it has gradually shifted its focus to the financial industry. In 2016, the financial industry received the most foreign investment and officially ranked first in FDI favored industries. The gap between the manufacturing industry and the second-ranked manufacturing industry has gradually widened. In 2020, of the capital invested by foreign investment in Cambodia, 1/3 will be invested in the financial industry. Even in the face of the new crown pneumonia pandemic, it still grew by 12.8% year-on-year.
Cambodian stock market performed well in the first quarter
The Cambodia Securities Exchange (CSX) has been established for ten years and currently has 7 listed companies on the motherboard. The epidemic broke out last year, and another 220 incidents occurred this year, putting most industries into trouble. However, the Cambodian stock market has grown against the trend and has delivered a beautiful report card.
According to information from the Securities and Exchange Regulator of Cambodia (SERC), the CSX index increased by 8.25% year-on-year to 639.36 points in the first quarter of this year. The total market value of the stock market came to 9.7 trillion riel (approximately US$2.4 billion), an increase of 345.73%. In addition, the number of shares traded in the first quarter increased by 51% compared with the previous quarter and 887% more than last year. The total number of shares traded reached 5.5 million shares. The total turnover reached 8.61 million US dollars, an increase of 152% compared with the fourth quarter of 2020, and an increase of 793% compared with the same period last year. The average daily turnover of 90,724 shares and the average daily turnover of US$14.118 million have both increased significantly over the same period last year.
The growth board ushered in the first company to go public
Compared with the 7 listed companies on the motherboard, the growth board has been empty. Finally, on June 22, the Securities and Exchange Regulator of Cambodia (SERC/The Securities and Exchange Regulator of Cambodia) approved DBD Engineering Plc to be listed on the growth board, becoming the first company to be listed on the growth board.
The growth board is mainly for small and medium-sized enterprises to help them raise funds for their operations. According to SERC regulations, companies with a working capital of more than US$7.5 million can apply for listing on the motherboard, and the growth board requirements only require companies to have US$500,000 in capital to apply. In addition to working capital requirements, listed companies need to submit audited financial report data every year, and large companies need to submit it once every two years. And the financial report must be a positive net profit or operating cash flow, and the gross margin must be above 10%.
Domestic demand and foreign investment, dual forces drive Cambodia’s financial market to take off
The bright performance of the stock market has stimulated more and more local Cambodian companies’ interest in listing. In addition to the upcoming listing of the first stock on the growth board, two main board companies are also expected to apply for listing. In the future, more and more companies will raise funds for corporate development through listing. With the help of the growth of domestic demand and the continued capital brought in by foreign capital, coupled with the vigorous support of economic development, the next few years will be a period of rapid take-off of the country’s financial market, driving more business opportunities.