Six Asian stock exchanges are planning to establish a trading platform linking their 180 largest companies to help promote cross-border and foreign investment.
The plan, being elaborated by the stock exchanges of Thailand, Malaysia, Singapore, Vietnam, Indonesia and the Philippines, comes as more mature Asian bourses are also helping expand the region’s stock market architecture by setting up the first exchanges in Laos and Cambodia.
Pakorn Malakul Na Ayudhya, chairman of the Thai exchange, said the six exchanges were in talks about allowing each bourse to add its 30 leading companies to a linked electronic trading platform, giving domestic investors much easier and cheaper access via their local brokerage to a portfolio of 150 foreign companies.
Such a portfolio could also be marketed to western funds seeking new Asian investment opportunities.
Laos is launching over-the-counter stock trading before the end of the year, with the help of the Stock Exchange of Thailand, following an agreement signed on Monday. The debut of OTC trading is set to involve shares in three state-controlled companies. Laos is then hoping to start a fully-fledged stock exchange in 2010, this time in partnership with the Korean stock exchange.
The Korean exchange is also involved in setting up an exchange in Cambodia, in which it is expected to hold a 49 per cent stake. Cambodia has averaged 9 per cent annual economic growth during the past decade and is hoping to develop into an oil producer.
Mr Pakorn told the Financial Times such initiatives would not only promote regional integration but also boost economic development by making it easier for companies to raise capital and attract foreign investors.
“What you see beginning to develop is the integration of stock exchanges in this part of the world,” he said.
Asia’s developing countries have long talked of setting up their own stock markets. But doubts persist over whether they can attract enough capital and corporate listings to gain clout.
Shin Gil-Soo, senior vice-president of the Korean exchange, told the FT that “both Laos and Cambodia have enough [potential] listed companies and investors to ensure that new exchanges will be operational. As for the profitability, however, we believe it would take some time.”
The latest plans come amid a worldwide market downturn that has hit Vietnam, which neighbours both Laos and Cambodia, particularly hard.
Asked whether the Vietnamese market slump could hinder the launch of a bourse in Laos by scaring away potential retail investors, Phouphet Khamphounvong, governor of the Bank of Laos, said that his country was following its long-term strategy “with great care.”
He added: “What has happened in Vietnam is being considered and this will be useful information for us.”