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22/03: Daily updates of the Lao Securities Exchange
1. Executive Summary
The Lao Securities Exchange: BCEL took its third downswing, showering debris all over the Lao stock exchange. The price of BCEL has slumped 4.42%, down to the lowest level since the first trading week. However, 112% more trades were recorded for BCEL, bringing its turnover to 494 million Kip. The price and trading volume of EDL-Gen plunged 0.75% and 45% respectively, exchanging for a turnover loss of almost 50%.
Banking sector sees strong growth, expects more to come: The government has made strong progress in its plans to strengthen and modernize banking and financial institutions to boost economic growth over the past 5 years. Since 2006 the banking sector has gradually developed to the point where numerous state and private sector banks are flourishing, providing more choice and better services to the people of Laos. The increase in the number of banks in Laos has taken place side by side with the gradual expansion and liberalization of the national economy.
Lao economy: GDP growth will remain robust: The World Bank has forecasted the Lao PDR’s gross domestic product (GDP) growth will remain robust this year, with projected growth of 8.6% compared to 8.4% in 2010. The natural resources and manufacturing sectors were expected to drive the national economic growth. The forecasted growth in garment exports would be between 15 and 20 per cent due to the EU relaxation in raw material sourcing requirement and increased orders by key garment producers.
2. The Lao Securities Exchange
The Lao stock market
The essence of a stock market operation involves fundamental investments and speculations, where one focuses on the long term prospects of a company and the other focuses on day trading. However, the recent Lao stock market seemed to be missing one out of the two required elements. The liquidity of BCEL apparently follows no rule, evidenced by the volatile daily movements, leading to the violent price fluctuations. On the contrary, the market saw fewer speculating reactions on EDL-Gen shares. The price of this stock has been fairly stable over the course of one month, following by sustainable trading volumes. Moreover, the petty capital gains won’t be enough to offset for the transactions fees. Long term investors are still trying to get a hold of the Lao economy before making their long term commitments. Laos is still in the process of joining WTO, and the country will have to comply with all of AFTA requirements by 2015.
The LSX Index 1,336.06 -18.95 [-1.40%]
The falling stock prices maimed the Lao stock market, draining 140 percentage points from the index. The Lao benchmark has retreated back to the 1,336 index points of last Tuesday. The market liquidity also dried up to only 291 thousand shares, equivalent to a 35% loss.
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