Cambodia Investment Review

Cambodia Securities Exchange Reviews 2024 Market Performance and Outlines Ambitious Plans for 2025

Cambodia Securities Exchange Reviews 2024 Market Performance and Outlines Ambitious Plans for 2025

Cambodia Investment Review

The Cambodia Securities Exchange (CSX) has released a comprehensive review of the market’s performance in 2024 and detailed its strategic goals for 2025. Despite challenges in the global and domestic economic environment, the exchange remains optimistic about its future growth trajectory and plans to further develop the securities market to attract both local and foreign investors.

Economic Growth and Market Context

Cambodia’s economy grew at a steady pace in 2024, with the Asian Development Bank (ADB) projecting a 5.8% growth rate, expected to rise to 6.0% in 2025. However, uncertainties stemming from global political tensions and domestic economic factors have created a cautious investment climate. The prolonged global crisis, fluctuations in the value of the U.S. dollar, and a downturn in Cambodia’s real estate sector have prompted many investors to adopt a wait-and-see approach, holding onto cash reserves instead of actively trading.

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2024 Market Highlights

Despite these challenges, the CSX achieved notable milestones in 2024:

  • New Listings: Two bond-listed companies, Telcotech and Royal Group Phnom Penh SEZ Plc, joined the market.
  • Growth in Trading Accounts: The number of active trading accounts reached 58,394, reflecting a 26% year-on-year increase, with 12,745 new accounts opened.
  • Local Participation: Local investors accounted for 93% of trading activity, signaling increased domestic confidence in the stock market.
  • Transactions: Major transactions involving PAS, GTI, and PWSA shares resulted in a trading volume of 1,213,554 shares, valued at 6.266 billion riels. Foreign investors contributed 60% of this volume, with Taiwan leading international participation at 39.50%, followed by Japan (21.31%), China (14.18%), and Thailand (5.36%).

However, the average daily trading value fell by 35% to 535 million riels (approximately $133,963), and the CSX Index declined by 12.68%. This was attributed to limited cash flow, reduced domestic consumption, and investor concerns over market volatility.

Investor Confidence and Educational Efforts

To address market challenges and build investor confidence, the CSX intensified its outreach and educational initiatives:

  • Training Programs: A mix of online and in-person sessions were conducted for investors, business owners, and the general public. Monthly training events and forums provided updates on market trends and investment opportunities.
  • Exhibitions and Seminars: Events like “My First Stock 2024” and the introduction of Multi-Cash Settlement Agents (Multi-CSAs) highlighted the exchange’s efforts to simplify trading and enhance investor convenience.
  • Collaborations: Memorandums of Understanding (MoUs) were signed with educational institutions to promote financial literacy and encourage the next generation of investors.

These activities underscore the CSX’s commitment to fostering a well-informed investor base and raising awareness about the benefits of participating in the securities market.

Challenges and Opportunities

While the CSX faced a decline in overall share prices, it noted that this downturn presents a buying opportunity for investors. Quality companies with undervalued shares offer potential for significant returns during a market recovery. The exchange remains confident in its ability to attract new investors as Cambodia progresses toward upper-middle-income status.

External challenges, such as global political instability and fraud concerns, have impacted market dynamics. Domestically, low volatility and limited cash flow have contributed to subdued trading activity. Nevertheless, the CSX views these challenges as opportunities to implement reforms and introduce innovative solutions to revitalize the market.

Strategic Plans for 2025

The CSX has set ambitious targets for 2025, aiming to:

  • Double Daily Trading Value: Increase the average daily trading value to $300,000.
  • Expand Market Participation: Add 15,000 new trading accounts.
  • Increase Listings: Bring six new companies to the market, including three equity securities and four debt securities.

To achieve these goals, the exchange has outlined key initiatives:

  1. Technological Innovation:
    • Enhance the CSX Trade platform with improved features for cash deposit and withdrawal.
    • Integrate artificial intelligence tools to provide real-time information and support for investors and potential issuers.
  2. Market Mechanism Reforms:
    • Introduce margin trading.
    • Adjust the daily price limit to 30%.
    • Shorten the settlement period for debt securities to T+1 and enable T+N settlement for negotiated trades.
    • Allow securities to be used as collateral, providing liquidity solutions for investors.
  3. Investor Education and Capacity Building:
    • Organize regular training sessions, forums, and seminars to equip investors with the knowledge to make informed decisions.
    • Launch new programs to attract active investors and increase trading volumes.
  4. Product Development:
    • Expand listings with high-potential companies.
    • Launch Cambodia’s first Exchange Traded Funds (ETFs), diversifying investment options.

Outlook for the Securities Market

The CSX remains optimistic about the future of Cambodia’s securities market. By addressing market challenges and leveraging opportunities, the exchange aims to position itself as a key driver of economic development. Collaboration with the Securities and Exchange Regulator of Cambodia (SERC), member companies, and other stakeholders will be crucial in achieving these goals.

The exchange encourages domestic investors to participate actively, emphasizing the role of the securities market in improving livelihoods, creating jobs, and driving national growth. With strategic reforms and new listings planned for 2025, the CSX anticipates a year of significant progress and opportunity for investors.

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