Lao Securities Exchange Launches With 2 Stocks
The Lao Securities Exchange (LSX) has begun trading services, creating new investment opportunities for investors in Laos.
An official ceremony to mark the occasion was held yesterday (January 11) at the LSX building on Khamphaengmeuang road, Xaysettha district, Vientiane.
Investors can now buy and sell stocks in publicly listed companies for the first time in Laos.
Two public companies – Banque pour le Commerce Exterieur Lao (BCEL) and EDL Generation – have listed on the exchange after completing the sale of their shares to local and international investors through initial public offerings (IPOs).
BCEL issued 20 per cent of its value in shares to domestic investors, while EDL Generation offered about 25 per cent to both local and foreign investors. Shares in both IPOs were oversubscribed, according to underwriters.
The BCEL share price rose from the average IPO price of 5,500 kip (68 US cents) to 8,000 kip (99 US cents)in the first day of trading on the LSX, while EDL Generation shares rose from 4,300 kip (53 US cents) per unit to 4,700 kip (58 US cents). The rises are seen as indicative of strong demand from local and foreign investors for Lao stocks, as well as investor confidence in the Lao economy.
The LSX is a joint venture between the Lao government and Korea Securities Exchange. The LSX building opened last October after a year of construction.
Speaking at yesterday’s ceremony, Standing Deputy Prime Minister and Chairman of the LSX Commission Somsavat Lengsavad said the establishment of the LSX comes in response to Lao government policy to mobilise funds for the development of the country.
The stock market will also help Laos to strengthen its financial system so it can be integrated with regional and international systems, he said.
The Lao government has said it requires funds of about US$15 billion to secure GDP growth of 8 per cent over the next five years. About 50 to 60 percent of the funds are expected to come from the private sector.
Lao banks are only able to provide short-term financing to businesses, making it difficult for them to undertake long-term investment or expansion projects.
The LSX is expected to help companies mobilise long-term investment funds and also ensure more transparent business operations, which will boost the confidence of individuals and businesses considering investing in Laos.
Shares in the first two companies to list on the LSX have proved popular with investors as the expected dividends are set to be higher than interest rates on deposit accounts at commercial banks.
A number of senior government officials and representatives from the Thai, Vietnamese and Korean stock markets attended the opening ceremony, with media from Thailand, Japan and Korea also covering the event.
Source: Asia News Network
Korea Exchange Announcement
On January 11, 2011, the Laos Securities Exchange (LSX) established jointly by the government of Laos and Korea Exchange was opened for trading at 09:00.
The KRX entered the MOU with the Bank of Laos, which is the central bank of the country in September 2007, stating their willingness to collaborate in the establishment of securities exchange in Laos. After 3 years of preparation, the LSX was incorporated on October 10, 2010 and opened for trading in January 2011. The LSX is the first overseas exchange that is modeled after the KRX.
The KRX has invested total of USD 9.8 million, including the cash contribution, provision of IT system, training of specialists and provision of consultation services for formulation of market laws and regulations, and holds 49% of equity of the LSX. The Bank of Laos has invested total of USD 10.2 million, including the cash contribution and provision of land and buildings, and holds 51% of equity of the LSX.
The board of directors of the LSX is composed of 3 members nominated by the Bank of Laos and 3 members nominated by the KRX. The Vice-chairman of LSX who is nominated by the KRX is accountable for the operation of 3 of 5 Departments that carry out the functions essential for the operation of the LSX.
Presently, 2 companies, EDL-Generation (EDL-Gen), which is controlled by the state-owned power company Electricite du Laos, and Banque Pour Le Commerce Exterieur Lao (BCEL), also a state-owned bank, are listed on the LSX. On the opening day, the orders were received from 08:30 and matched at 11:00 using the single price auction method. The order receiving hours of LSX is from 08:30 to 11:30 and the orders are matched at 10:00 and 11:30 using the single price auction method, while disregarding the time priority. In the future, the decision on the introduction of continuous auction method will be made by taking into consideration such factors as the growth of trading volume.