Laos’ Dam-Breaking Debut
The Lao Stock Exchange, co-owned and managed by its Korean counterpart also aiding Cambodia’s preparations, formally launched in mid-January with two hydro-electricity and bank listings snapped up by domestic and foreign investors. On the first day prices rose on the kip equivalent of $250,000 in trading, and fifteen more mainly state-run companies have applied for admission, according to officials and the two registered securities brokers. The bourse plan dates back five years as part of a decades-long communist push under the New Economic Mechanism policy to allow private enterprise scope. The US lifted commercial sanctions in 2009 permitting bilateral aid and trade with its former war adversary, and the World Bank and Asian Development Bank have extended loan and technical support to achieve the 8 percent medium-term annual GDP growth target. Agriculture and tourism are major contributors, but a centerpiece has been water power generation and distribution through a series of Mekong River dam projects with Thai, Vietnamese and Chinese participation. Environmental groups have criticized their impact, while Thailand’s Ratchaburi Electricity was the largest international buyer of the EDL-Generation IPO 10 percent reserved for that base, which is limited to a minority stake. The Lao authorities have declared a goal of raising $8 billion in debt and equity through mid decade as they parallel the path of Vietnam’s exchange which also began sparsely but now counts 275 companies as an Asian MSCI frontier index stalwart.
Mongolia too may soon join following a 2010 world-beating upswing, successful flotation in Hong Kong of a gold miner, and signature of a strategic partnership with the London Stock Exchange to offer management, privatization, trading and oversight advice and systems. The bourse there is capitalized at $35 billion as the large Tavan Tolgoi project to meet Chinese commodities appetite moves closer to a public offering. The cross-border rail network with Russia is being rebuilt, and the $230 million emergency loan from the IMF has been repaid. With precious metal revenues coming on stream, the country is looking to replicate Chile’s stabilization fund model while cushioning currency appreciation pressure. Elsewhere, Vietnam plans to link with the Asean cross-trading arrangement which will begin with Malaysia and Thailand by year-end. Singapore is vying with Hong Kong to attract frontier listings to offset the latter’s mainland Chinese company advantage, and has moved to continuous operation including cancellation of the traditional lunch break in an effort to win business that may ultimately overflow.