The Lao Securities Exchange (LSX) has begun trading services, creating new investment opportunities for investors in Laos.
An official ceremony to mark the occasion was held yesterday at the LSX building on Khamphaengmeuang road, Xaysettha district, Vientiane.
Investors can now buy and sell stocks in publicly listed companies for the first time in Laos.
Two public companies - Banque pour le Commerce Exterieur Lao (BCEL) and EDL Generation - have listed on the exchange after completing the sale of their shares to local and international investors through initial public offerings (IPOs).
BCEL issued 20 percent of its value in shares to domestic investors, while EDL Generation offered about 25 percent to both local and foreign investors. Shares in both IPOs were oversubscribed, according to underwriters.
The BCEL share price rose from the average IPO price of 5,500 kip to 8,000 kip in the first day of trading on the LSX, while EDL Generation shares rose from 4,300 kip per unit to 4,700 kip. The rises are seen as indicative of strong demand from local and foreign investors for Lao stocks, as well as investor confidence in the Lao economy.
The LSX is a joint venture between the Lao government and Korea Securities Exchange. The LSX building opened last October after a year of construction.
Speaking at yesterday's ceremony, Standing Deputy Prime Minister and Chairman of the LSX Commission Mr Somsavat Lengsavad said the establishment of the LSX comes in response to Lao government policy to mobilise funds for the development of the country.
The stock market will also help Laos to strengthen its financial system so it can be integrated with regional and international systems, he said.
The Lao government has said it requires funds of about US$15 billion to secure GDP growth of 8 percent over the next five years. About 50 to 60 percent of the funds are expected to come from the private sector.
Lao banks are only able to provide short-term financing to businesses, making it difficult for them to undertake long-term investment or expansion projects.
The LSX is expected to help companies mobilise long-term investment funds and also ensure more transparent business operations, which will boost the confidence of individuals and businesses considering investing in Laos.
Shares in the first two companies to list on the LSX have proved popular with investors as the expected dividends are set to be higher than interest rates on deposit accounts at commercial banks.
A number of senior government officials and representatives from the Thai, Vietnamese and Korean stock markets attended the opening ceremony, with media from Thailand, Japan and Korea also covering the event.