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20/06: Daily updates of the Lao Securities Exchange
1. Executive Summary
The Lao Securities Exchange
The weekend drizzles have left a muggy flavor on the Lao bourse. The securities market desiccated quickly to rigid mud as both stocks relinquished most of their liquidity. BCEL flattened out on the 8,100 Kip as 3,200 shares (-46%) exchanged for a tiny LAK 26 million. EDL-Gen tried to balance out the poor trades by exhausting its price further to 5,150 Kip; unfortunately, the effort was only enough to attract 2,900 shares (-84%), which in turn generated a mediocre turnover of LAK 15 million.
Lao, Chinese energy developers ink hydropower deal: China International Water & Electric Corp (CWE) and Electricite du Laos (EDL) last week signed a shareholders agreement on the Nam Ngiep 2 hydropower development project, based in Xieng Khuang province, after more than a year of negotiations. The project involves investment of about 2.8 trillion kip (US$345 million), of which EDL will initially hold a 10 percent share and the rest will belong to CWE. When the plant is operational, it will have installed capacity of 180 megawatts (MW) with two generators that will produce 723GWh per year.
Ratchaburi to boost investment in Lao energy: Ratchaburi Electricity Generating Holding Plc. (RATCH), the largest electricity generator in Thailand, has approved investment funding of about 540 billion kip (2 billion Thai baht) to build the Xe-Pian Xe-Namnoy hydroelectric power plant in Laos. According to RATCH, it will hold 25 percent of the new joint operating company for the 390 megawatt electricity plant. Korea-based SK Engineering and Construction will control 26 percent, 25 percent will be owned by Korea Western Power (Kowepo), and 24 percent by Lao Holding State Enterprise (LHSE).
2. The Lao Securities Exchange
The Lao stock market The liquidity problem we have talked so much about has become a big issue. Both stocks shared the same bag of limited demand, which only get lighter as trades drag on. The discretionary traders have gradually altered their mind set from “no, that’s too low” to “anything can happen now.” Demands have not flourished for many other reasons. On the standpoint of local investors, they are trading solely by intuition; it can take years for the majority to comprehend what stock market really is, and even longer than that for them to start using trading tools. Once they have lost money, their confidence is as fragile as candle in the wind.
Additionally, physical appearance at the LSX building is required for the real time access to the stock-board; hence investors from other provinces are being kept out from what is going on in Vientiane. However, Lane Xang Securities Company will soon provide investors a solution with its online stock-board, which is at the final development stage before publishing. On the standpoint of foreign investors, their biggest concern is the lack of transparency, not to mention the size of the Lao securities market. In other words, they hunger for information. Hopefully as soon as other companies get listed on the LSX, new capitals will flood in to revive the pale demand.
The LSX Index 1,078.17 -16.78 [-1.53%]
The Lao benchmark stiffened up as the result of volume distillation; almost 17 points were removed from the index, pulling it down to 1,078 points. Market’s liquidity barely got over 6K shares (-75%), which has become the lowest trades figure since Jan 11th. Turnover has accumulated to LAK 41 million, a 71% decline since Friday.
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