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Although Cambodia’s economic liberalization began in the 1990s, the country’s first equity listing did not occur until 2012. The Cambodian government is implementing a variety of measures to accelerate capital market development.

The Emerging Asia Pacific Capital Markets: Cambodia

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The Cambodian capital markets have come a long way considering that the Paris Peace Agreements, which ended the nation’s civil war, were signed only in 1991. Strong GDP growth (10.8% annually between 2000 and 2018), a dollarized economy with free movement of capital, and a policy consensus favoring investments should have spurred the rapid development of a securities exchange in Cambodia. The first equity listing on the Cambodian Stock Exchange (CSX), however, did not take place until 2012.

Currently in Cambodia, seven companies are listed on the main board, and another six companies have issued eight bonds. The CSX is still small in size compared with its Asian neighbors’ bourses. Its development is also behind schedule given the urgent need of local corporations to find cheap and convenient sources of funding. Stocks and bonds on the CSX have had comparatively low returns historically when compared with less risky bank deposits or higher returns from real estate.

Mindful of these challenges, the Royal Government of Cambodia has implemented a broad range of measures to support faster capital market development. Educating both investors and corporations, introducing accounting standards and audit requirements, and licensing such market actors as fund management companies, securities brokers, and custodian banks, to name a few, will provide the infrastructure and support Cambodia needs for long-term growth.

Listing private companies with exciting growth prospects will be key in renewing interest among potential investors in Cambodia. Likewise, new investment choices such as REITs, private equity, and mutual funds should spur further interest. The creation of a government bond market will be critical as well in order to attract institutions that crave safe and long-dated assets for asset–liability management purposes.

All of these factors combine for a constructive view of the prospects for Cambodian capital markets.

This article is from "The Emerging Asia Pacific Capital Markets: Challenges and Opportunities," published by CFA Institute Research Foundation.

About the Authors

Chakara Sisowath
Chakara Sisowath CFA

Chakara Sisowath, CFA, is co-founder and managing partner of 3E-Fii Capital, the corporate finance practice within the 3E-Fii Group. His competencies include investment evaluation and selection, firm competitiveness and industry benchmarking, financial modeling and analysis, and risk identification and management. Previously, Mr. Sisowath was an equity analyst and portfolio manager at Fidelity International and Credit Lyonnais International Asset Management, both in Tokyo. As a partner and managing director at Comgest in Hong Kong, he managed Asian equity portfolios and directed the team of research analysts and portfolio managers. Mr. Sisowath is an independent non-executive director of Manulife TEDA Fund Management Co. in Beijing. He holds an MBA from the University of Chicago Booth School of Business and a BA from EDHEC Business School in Lille, France.

Seng Chan Thoeun
Chan Thoeun Seng CFA

Seng Chan Thoeun is managing director at SBI Royal Securities in Phnom Penh. Involved in the Cambodian investment industry for more than 10 years, he has directed the successful completion of several historic transactions, including the IPO of Phnom Penh Water Supply, the IPO of Phnom Penh Autonomous Port, and the IPO of Sihanoukville Autonomous Port. Mr. Seng also oversaw the issuance of the first-ever corporate bond in Cambodia and completed three other public issuances of corporate bonds among the six in total. He holds a master’s degree in international finance from CERAM Business School and has passed the Level I and Level II exams for the CFA Program.

Varabott Ho
Varabott Ho

Varabott Ho is an associate professor at CamEd Business School. His experience includes more than 12 years at Credit Suisse and encompasses private banking, asset management, hedge funds, private equity, bancassurance, and corporate advisory across Europe and Asia for such entities as the Association of Banks in Cambodia, Banque Hottinguer, Aberdeen Asset Management, AXA, and Leopard Capital. He holds an MBA from the University of Chicago Booth School of Business and is a certified European Federation of Financial Analysts Societies international investment analyst. Mr. Ho currently is pursuing the Corporate Director Program at Harvard Business School and the Economic Development and Public Policy program at Harvard Kennedy School.