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LSX offers foreign investors big opportunities: Top official
Trading at the Lao Securities Exchange (LSX) has remained stable despite plunges in global markets, according to a top exchange official.
LSX Vice Chairman and Chief Operating Officer Mr Hoejong Park said that the Lao stock market index had lost only 2.5 percent over the past few weeks despite plummeting world markets.
“For the last two weeks, all the global stock markets dropped and tremendous value and market capitalisation vanished, mainly triggered by market concerns about a dip in the global economy and the downgrading of the US' credit rating,” he said in his opening remarks to a seminar in Vientiane on Monday.
“There were virtually no exceptions worldwide, yet the LSX remained undisturbed and the index just lost 2.5 percent during the global chaos.”
Mr Park said that the stability of the LSX amid the global market volatility was a reflection of the fact that foreign investment was still low and that Lao nationals own the majority of shares.
According to a report from t he LSX, the stock market has about 6,600 investors. Of those, 1,140 are foreigners from 20 countries, including China, Thailand, Vietnam, Korea, Australia and New Zealand, and account for 17 percent of the total investors. However, they are active in trading and represent 50 percent of the total trade volume.
Most of the Lao investors buy stocks because they want to receive dividends rather than seeking returns through high trade volumes like foreign investors.
Mr Park said that the small number of foreign investors in volved in the LSX has increased the potential for foreign investors to explore opportunities because they become the primary movers in the stock market and the LSX would welcome 10 new foreign investors every week.
He said that the LSX, a joint venture between the Bank of the Lao PDR and Korea Exchange, has established a reliable foreign investment management system and regulations to protect the interests of foreign investors. The system has already proved effective in the Korea Exchange.
“In addition, the Lao stock market has simplified its procedures for opening accounts as one way of attracting more local and foreign investors,” he noted.
The LSX Commission also approved a regulation to allow foreign investors to buy more than 10 percent of shares in a single company but restricted their ability to exercise voting rights associated with owning the shares.
Mr Park said that the recent drop in the LSX index had nothing to do with drops on global markets but was a result of profit taking from initial public offering shares and a market correction.
The LSX index debuted in January at the 1,000 point mark and reached an all time high of 1,865 in February before beginning a steady decline. About 46,000 shares were traded in recent months, dropping from 240,000 shares in the first seven months after the market opened.
vientiane times
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