The Lao government has opened up opportunities for foreigners to buy shares in a bid to boost investment in the Lao stock market.
Lao Securities Exchange Chairman and CEO Dethphouvang Moularat said yesterday the government had given the green light for foreigners to own 20 per cent of the total shares listed in the stock market.
"Lao Securities and Exchange Commission Chairman Mr Somsavat Lengsavad has signed an agreement to allow total foreign ownership of 20 per cent of shares listed on the stock market," he said at a press conference to mark the first anniversary of trading on the Lao market.
Under previous regulations, foreigners were allowed to purchase only 10 per cent of listed companies' shares.
The relaxed foreign ownership of shares will enable greater outside participation in the Lao stock market, and will give more foreigners the chance to explore investment opportunities in one of the fastest growing economies in the world.
However, foreign institutions are still banned from owning more than five per cent of total shares in the market and a single individual may not own more than one per cent of the total.
Dethphouvang said that despite the change in policy, the government still sees the need to limit foreign ownership of shares to prevent the rapid inflow and outflow of foreign currency.
He said the Bank of the Lao PDR had sufficient foreign reserves to accommodate the opening up of the stock market to foreign investors.
To further boost investment in the stock market, a Lao-Korean joint venture plans to launch an online trading system, which will allow foreign investors to post buy and sell orders over the internet, Dethphouvang added.
The market has signed a memorandum of understanding with Enterprise of Lao Telecom to secure a high-speed internet signal, as this is necessary for online trading.
Dethphouvang also said the market was looking for a supplier of suitable IT equipment, hoping to launch online trading in the first quarter of this year.
One of the major projects the stock market hopes to undertake in 2012 is to set up block trading, which will enable investors to buy shares in quantities that boost stock trade volume and value.
The Lao Securities Exchange opened for trading on January 11, 2011. Trade boomed initially before slowing. Three more companies--ETL, Lao World Group and Indochina Group--plan to list on the stock market in the near future.
The Lao Securities and Exchange Commission postponed an agreement to allow EDL to list last year, saying the global economic downturn did not provide a favourable environment for the state-owned enterprise to sell its shares to the public.
