Cambodia, SKorea open stock exchange project

Last Updated: 6-September-2007  09:55:34

PHNOM PENH, Cambodia (Thomson Financial) - Cambodia Thursday launched a project to establish the country's first securities market, partnering with South Korea in a programme that hopes to see a stock exchange established by 2009.

"The securities market is essential for sustained national economic growth," said Dr Young-Tak Lee, chairman of the Korea Exchange who joined senior Cambodian officials, including Prime Minister Hun Sen, for the opening of the project.

While still one of the world's poorest countries, Cambodia has emerged from decades of conflict as one of the region's rising economies.

Its annual economic growth has averaged 11 percent over the past three years on the back of its strong garment and tourism sectors.

"Cambodia has achieved remarkable macro-economic stability and economic progress," Hun Sen said, while acknowledging the challenges of setting up a bourse -- particularly the raft of legislation that still needs to be drafted before an exchange can become a reality.

"A securities market is the lifeblood of a capitalist economy which will actively contribute to mobilising financial resources," he said.

Lawmakers are expected this week to approve legislation on issuing and trading non-government securities which will be the first step in regulating a future exchange.

Over the next three years, South Korea plans to contribute training and technical expertise to Cambodia's bourse programme, officials said.

Cambodia remains a largely cash-only economy and a high degree of mistrust keeps many people hoarding their money at home instead of using the banks.

But the country's finance sector is expanding, the International Monetary Fund said earlier this year, with new bank loans and deposits increasing by around 40 percent, setting the stage for further development.

In April, Cambodia was assigned its first-ever sovereign debt rating by rating agency Standard and Poor's, which said the impoverished country's outlook was "stable".

The B+ rating is below investment grade status, restricting many institutional investors, but it is a significant step in Cambodia's bid for economic respectability.

Source: http://www.sharewatch.com/story.php?storynumber=17036