Central bank expects more investment in securities market

Lao enterprises will find it easier to use the securities market as a platform to mobilise investment after the National Assembly approves the amended Law on Securities, according to the top official of the Bank of the Lao PDR.
The central bank Governor, Mr Sonexay Sithphaxay, made the comment on Tuesday while proposing the amendment of the Law on Securities for National Assembly members to consider and approve.
“The amendment of the law would create more favourable conditions for state and private business units to mobilise funds from the securities market. The revised law will also encourage more individuals and enterprises to invest in securities,” he told the lawmakers.

Mr Sonexay said the Bank of the Lao PDR also expected the amendment of the law would increase the business community’s confidence in investing in the securities market.
On top of that, the amended law would facilitate cooperation between domestic securities administration officials and their regional and international peers making a significant contribution to the development of the Lao stock and bond markets, he said. 
According to Mr Sonexay, Laos opened the stock market in 2010, aiming to create a platform for business people to mobilise their investment funding.  To ensure the effective administration of the market, the government issued the PM’s decree on Securities in 2010 and upgraded it into law in 2012.
Since its interception, the Lao stock market has mobilised 19,197 billion kip in investment or 12 percent of GDP. There are 11 enterprises listed on the stock market.
Lao nationals operate some 78 percent of stock investment accounts with the remainder run by foreigners and legal identities.  
Mr Sonexay said the establishment of the Lao securities market had helped the listed companies operate more professionally, adding that these firms have adopted international management practices. The operation of the listed enterprises is also more transparent, and taxes are fully paid to the government.
He said one challenge the local securities market faced was Lao nationals not actively trading stocks despite them making up the majority of investment account holders.
Most Lao investors had no intention to make a capital gain from stock trading but prefer to receive dividends from the listed firms. This contributed to low trading volumes, he added.
He also noted the limited number of companies listed on the stock market which made it more difficult for investors to diversify their portfolio across numerous sectors.
Mr Sonexay said that the amendment of the law was essential to make it more relevant to the current context and would create favourable conditions for the growth of the local stock market.

By Ekaphone Phouthonesy
(Latest Update December 5, 2019)