Lao stock market seeks hydropower spark

Lao Securities Exchange (LSX) expects to list more than 23 firms by 2020, according to the exchange’s top official.

LSX Chairman and Chief Executive Officer Mr Dethphouvang Moularat said, as quoted in Thai Newspaper Bangkok Post last week, the stock market would approach companies which invest in hydropower plants in Laos to list on the stock market so these firms can access long term investment capital.

Since its debut in 2011, three companies: EDL Generation, Banque Pour Le Commerce Exterieur Lao and Lao World have listed on the LSX.

Laos has potential to build more than 100 hydropower plants in the country thanks to its abundance of rivers and mountainous terrain suitable for dam construction. At present, a number of companies from Thailand, Vietnam, China and Russia have shown interest in the mega investment projects.

The Lao government has a policy to turn the landlocked country into a major supplier of electricity in the region. At present, there are more than 20 power plants with combined electricity generating capacity of 3,000 MW operating in Laos. Most of the power is exported to the neighbouring countries of Thailand and Vietnam.

Observers have noted that the Lao government holds shares in major power companies such as Nam Theun 2 and Hongsa power plants; therefore it is possible for it to sell some of its shares to local and foreign investors to free up cash to spend on more important state projects.

Over the past few years, the Lao government has been increasing efforts to encourage local firms to list on the local stock market as part of efforts to help them gain access to investment funds. However, one of the major challenges the Lao firms face is their need to improve management and reporting practices to meet stock market requirements.
A number of local companies including a cement producer in Khammuan province are hiring international consulting firms to provide them with advice on how to improve their operations in preparation to meet the stock exchange’s requirements.

Local business people told Vientiane Times that they are giving serious consideration to the Lao stock market’s new investment opportunities. However, they said they were cautious about putting their money in as they have no experience in this form of investment.

At present, most of the investors who are active in the market are from Thailand, Japan and China. More foreign investors have been active since the market introduced an online trading system last year, allowing investors to purchase and sell shares via the internet.

Investor activity in the market is expected to increase if the number of listed companies increases as it will give them more investment choices.
Shares of BCEL and EDL Gen on the stock market are actively traded while shares of Lao World have remained inactive over the past several months.


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