Vietnam securities firms eye foothold in Laos, Cambodia

An investor checks stock movements at an exchange in Ho Chi Minh City.

With Laos and Cambodia’s first stock exchanges slated to begin trading next year, Vietnamese securities companies are seeking to expand their operations and Vietnamese stock market players see more investment options.

The Lao Securities Exchange was established in October and will commence trading operations on January 11. Banque pour le Commerce Exterieur Lao (BCEL), one of the largest commercial banks in the country, and EDLGeneration Pcl, a unit of state-owned Electricite du Laos, will be the first two enterprises to be listed on the bourse.

The exchange’s opening has helped Vietnam’s Sacombank Securities expand its business to the smallest economy in Southeast Asia. The brokerage firm and the Lao Development Bank (LDP) have set up the first securities firm in Laos, named Lane Xang Securities Public Co. Sacombank Securities holds a 51- percent stake in the joint venture.

Lane Xang was financial adviser for the initial public offering (IPO - a necessary process before being listed) made by BCEL.

The firm has also signed deals to do the same for other Lao enterprises.

“Lane Xang has won in competition with many Thai and Korean securities companies [to become advisers to the BCEL IPO] as the Lao economy is similar to Vietnam’s, which has begun from a state-owned base and then entered the equitization stage,” said Nguyen Hoang Giang, consultancy director of Sacombank Securities.

Giang said Lane Xang Securities not only provides financial consultancy services for enterprises seeking to list their shares on the Lao stock exchange but also acts as a broker for investors wanting to trade shares on the bourse.

The IPO of BCEL, the first-ever in Laos, closed on December 23. The atmosphere was exciting and the shares were oversubscribed, said Giang.

Nearly 20.5 million BCEL shares, or 15 percent of the lender’s registered capital, were offered on auction at an average bid price of 5,910 kip (74 US cents), he said.

Only Lao investors were permitted to subscribe for shares in the bank as the Lao Securities Exchange Commission is yet to decide on the portion of shares that foreign investors can hold in a company, the Vientiane Times said on December 15.

However, many Vietnamese investors are hopeful that they will get the opportunity to buy shares of Lao companies in future IPOs.

As for the Cambodia, the Kingdom’s first stock exchange is also due to open in 2011.

The launch of the US$6 million bourse, which is being built by a South Korean developer, has twice been delayed but the Finance Ministry says it will begin trading by July 2011 “at all costs.”

The ministry has given priority to state companies for listing, and has asked Telecom Cambodia, port operator Sihanoukville Autonomous Port and the Phnom Penh Water Supply Authority to list their shares, Reuters said last month.

Meanwhile, two Vietnamese firms, Cambodia-Vietnam Securities and Sacombank Securities (Cambodia), are among fifteen companies that have been granted licenses by the Securities and Exchange Commission of Cambodia to operate on the bourse.

The former is permitted to operate as an underwriter that will provide advice on the issue of securities - such as pricing, public offerings and distribution timelines.

The Cambodia-Vietnam Securities Company belongs to the Bank for Investment and Development of Cambodia Plc, a subsidiary of the Bank for Investment and Development of Vietnam, also known as BIDV.

Several other Vietnamese companies that wished to remain anonymous said they had plans to open securities firms in Laos and Cambodia in the near future.