Cambodia is going IPO since
the communist leader Khmer Rouge was captured in 1975. According to the Asian Development
Bank, Cambodia is expected to grow at 6.5% rate this year. The Cambodian government wants to stir up
their economy by privatizing its state-owned companies and encourage private
companies to list, so that later on, it could attract foreign investors. People of Cambodia are welcoming the embrace
of capitalism and eager to learn, although, there are some doubts because of
their low saving rates and newcomer in financial market.
4 comments:
Should be interesting to see how neighboring countries end up responding to this change. I don't know the region that well but I have to imagine that Cambodia may become a model for development
Moving towards IPO financing allowing for more open capitalism that allows the average citizen to participate in capitalism. It will be interesting to see how the IPO market developments over the next decade and to see if it provides the average citizen an opportunity to invest.
This is a really interesting article to read, especially for its information regarding to its economic situation in the old communist dictatorship system and the transition blueprint for a new market based system. It is totally related to what we learned in class so far. How the shortcomings of central planning economy, and how the transition could be.
I am quite suspicious about the transition of its system, however. It is not a quick done success, but a thing that might have lots of failures and dropbacks before it goes on to the right track. The IPO will definitely boost its economy, but under such situation, as described, where the economic and financial background is so incomplete, the further construction can be quite fragile.
Very good point, Guanyi. The introduction of the capital market is not an easy task, esp. for countries like Cambodia, whose system was communism in the recent past. As the article pointed out, the market confidence must at first be established, which I think is still lacking. Besides, knowledge of the new system must also be firmly disseminated, otherwise the financial market will be very, very inefficient. By inefficient here I mean prices of stocks, and other securities alike, do not reflect full information about the underlying value of firms or assets. With such inefficiency, if exists in its extreme case, stock market becomes a legal casino, in which only transfers of money happen, widening the income inequality gap without producing any more economic activity.
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