- Don Weinland
- Friday, 27 April 2012
Despite the drop, which was accompanied by a strong shift from institutional to retail investors, experts have stressed the time and patience required for a fledgling market – one with a single stock traded – to find its feet.
The relatively high opening price for public utility Phnom Penh Water Supply Authority contributed to the declining volume of trades, insiders said.
PPWSA closed at 8,800 riel (US$2.18) yesterday, down 4.86 per cent, near to the exchange’s mandated 5-per-cent trading range for the stock.
More than 590,900 shares went unsold yesterday, with close to 1 million unexecuted the day before.
“At the original price, there were some big profits for some early investors,” Dao Duy Anh, deputy chief executive at Cambodia-Vietnam Securities, said yesterday.
“This is one of the first [investment opportunities] available to the Cambodian people, and there was a lot of excitement during the first days.”
From the initial public offering price of $1.57, PPWSA peaked at $2.55 last Friday.
The price, Dao Duy Anh said, started high.
After a quick transfer from institutional to retail investors, traders were bound to wait for prices closer to regional price-to-earnings ratios, he said.
On Wednesday, PPWSA traded on a price-to-earnings ratio of 28, “significantly above regional comparables”, according to an SBI Royal Securities report yesterday.
The average ratio for peer companies in 2012 was 11 to 12 times earnings.
The ratio is a way for traders to gauge whether a stock is overvalued or undervalued relative to its peers.
The early performance of the CSX has been considerably different from that of the Lao Securities Exchange, which launched in January 2011.
The LSX index of two companies, a state-owned energy firm and Lao’s largest bank, climbed 87 per cent during the first 15 days of trading before eventually falling below its original starting level some 11 months later, according to LSX data.
The LSX yesterday was 32 points above its 2011 opening.
The trading volume of PPWSA, however, was stronger than Banque Pour Le Commerce Lao, a comparable IPO, Tong Yang Securities country head Han Kyung-tae noted yesterday.
BPCL floated 20.5 million shares with an average of 128,305 shares traded during its first seven days, according to LSX data.
PPWSA’s first seven-day average was considerably higher at 340,275 shares traded, CSX data showed.
The state-owned water utility floated about 13 million shares.
BPCL shares yesterday sold for 6,800 kip ($0.86), down from the original price of $1.06. It peaked at $1.95 on February 1, 2011.
The decline in PPWSA trading was “not surprising”, Han Kyung-tae said.
Retail investors were quick to sell at the first sign of a downward trend, he said. Buyers would wait until the price settled.
Given PPWSA’s growth performance above regional water utilities, current prices were not unreasonable, he added.
The past three days has seen some “shortsighted action”, he said
Operational troubles at banks and brokers may have a continued effect on trading, Dao Duy Anh at Cambodia-Vietnam Securities said.
Some institutional investors abroad have noted problems in connecting with brokers in Cambodia, and there was some concern over transfers between broker and settlement bank accounts, he said.
Brokers reported technical problems for money transfers between broker and settlement bank accounts this week.
CSX deputy director of market operations Lamun Soleil stressed that there have been no technical problems reported at the exchange itself and the impact of buyer-side glitches were small.
Kim Dae-chon, senior manager of emerging-markets business at Korea Exchange, and who helped to launch the CSX, said Cambodia’s exchange will require continued patience and confidence from all parties.
“It’s like a baby. It takes time,” he said yesterday by phone from Korea.
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