CSX release its 2022 strategic outlook

Harrison White

Cambodia Securities Exchange (CSX) has released its annual strategic outlook highlighting the exchange is projected to list eight more firms, provide more trading functions and strengthen information networks.

The CSX noted that they are “foreseeing” tax breaks for listed companies to be extended into 2022 forecasting five stocks and three bonds will be added to the current six bonds and eight stocks listed.

Accelerating Cambodia’s capital market

In the 2022 strategic update [CSX] outlined they are looking to expand and accelerate the capital market in Cambodia, adding, “what the industry needs involve having more supply and demand”.

“To improve the available supply in the securities market, the CSX must focus on increasing the number of equity and debt security listings by focusing on small and medium enterprises from IT, Telecom, Healthcare, Logistics, and Foods and Beverages, which are currently on the rise.

Secondly, we will aim to introduce more equity products to the market; such as the Government Bond Collective investment Scheme, direct listing without initial public offerings, and holding company listings alongside other new products.”

CSX has been conducting workshops including its flagship “35 minutes on Business” to teach more investors about the local stock market.

New functions for traders

The exchange also outlined an agenda to increase the overall demand by focusing on facilitating and adding new functions to the trading process.

“Clearing and settlement operations will be made easier by improving the current app version for the mobile trading system, and online account opening.

Margin trading, foreign currency settlement arrangements, and shortening bond settlement times from T+2 to T+1, as well as the introduction of the CSX’s first custodian agent member, and the establishment of a Cambodian investor network.

Secondly, CSX has engaged in steps toward making Cambodia’s stock data available on global financial platforms. Thirdly, we are strengthening our information networks and cooperation via collaboration with relevant parties such as local and foreign media and prominent stock exchanges.

Fourthly, we are conducting more online and public events to raise awareness of the market. Lastly, we are encouraging the production and promotion of analysis research reports.”

In 2021 the CSX Mobile Trading System (MTS) had approximately 477,000 orders placed.

Extending tax breaks and 10th anniversary 

One of the most anticipated news for the local market is the Securities Exchange Regulator of Cambodia (SERC) decision to extend tax breaks awarded to listed companies.

Previous legislation introduced in 2019 allowed listed companies a 10% reduction of the Tax on Profit and a 50% reduction on withholding taxes on dividends and interest for 3 years. Instead of the normal rate of 20%, listed companies pay only 18% tax on their net profit for those 3 years.

The sector is expecting the SERC to extend these tax breaks however Cambodia investment Review has not been able to confirm this.

The CSX will celebrate its 10th anniversary this year as still one of the smallest market caps in the world.

The exchange has struggled to attract listings and is hampered by low liquidity levels. However, increasing awareness by local and international investors as well generous tax incentives is making the exchange more attractive.

Cambodia Investment Review previously reported total trading on Cambodia’s stock market hit $23.9 million during the fourth quarter of 2021 – a 609% increase year-on-year as the exchange hit a total market capitalization of $1.75 billion down 26% over the same period.

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