Foreign investors driving Lao stock market
Foreign investors driving Lao stock market
Most of those who trade stocks on the Lao Securities Exchange are foreigners, even though the government has restricted their right to own shares in the companies listed.
According to the annual report published by the stock market, 58.46 percent of people trading on the Lao Securities Exchange in 2012 were foreigners, 29.40 percent were Lao individuals and 9.93 percent were corporations.
Institutional investors comprised 0.18 percent of the total number of traders, while 2.03 percent of investors were not classified. The main foreigners trading in the Lao stock market in 2012 were from China, Thailand, Japan, Republic of Korea, Vietnam and the US.
The government has limited the number of foreign shareholders due to fears that rapid inflows and outflows of foreign currency would have a negative impact on currency management.
While Lao people are not restricted in the number of shares they can own, they tend not to buy and sell stocks to make a profit as foreigners do. Most Lao investors buy shares with a view to long term savings and the dividend they will receive from the two listed companies.
One of the reasons why Lao investors are relatively inactive compared to foreign investors is because for them stock investment is a new area of business, and they feel the need to learn more before making decisions on trades.
In general Lao people view investment in land and gold as a more preferable option due to the rapid increase of land values in Vientiane and other major towns, where land is in high demand for commercial properties, residential buildings and offices.
The government opened the Lao Securities Exchange in 2010 with trading beginning in early 2011. The government views the stock market as a tool to help businesses generate capital through the sale of shares to the public.
The stock market also provides opportunities for people to invest so they can make a profit from the dividends paid out by the listed companies. At present, EDL-Gen and BCEL bank are the only companies listed on the market.
It is expected that more companies will be listed. But a major challenge for those considering selling shares is that they must prove their operations are transparent. They must reveal their business performance so that potential investors are confident about purchasing shares in the company.
vientiane times
