The term securities market is in reference to financial items that are distributed to raise money and can include stocks and bonds, as well as derivatives. These markets, though relatively new to the people of Cambodia, are a well-known investment vehicle that has been popular for many years throughout the world.
A major function of securities trading is to facilitate the transfer of resources that have been passively possessed to the possession of individuals or companies that wish to actively utilize them. In laymen’s terms, securities markets provide the means for converting money that is being saved into active investments.
The Cambodian Securities Exchange began its operations in 2012 when it initiated trading with a state-owned enterprise in Phnom Penh. This development was followed shortly afterward by two additional SOEs in the country as well as two companies that operate privately. These companies all chose to raise funds using the CSX while also allowing the people of Cambodia the opportunity to invest in the company stock.
The securities market in Cambodia has benefits to the country other than providing for the transfer of resources.
Creation of Jobs
Job creation is a welcomed by-product of a high-functioning securities market. This effect is more pronounced in the financial sector. Both operators and regulators are needed to sustain a securities market. There is also the need for financial advisors, investment analysts, and a variety of other highly skilled individuals to be added to the labor force.
Businesses and firms of all sizes can benefit from the opportunity presented by a securities market to raise money for expansion and operations. Many times this is a superior option for companies in need of cash over traditional financing options.
Sharing of Wealth
The small amount of money needed to invest in a securities market assures that the opportunity is available to everyone. Wealth building options like entrepreneurship and real estate investing require larger capital investments which make them cost prohibitive for many individuals.
Higher Tax Revenue
A well-developed securities market will mean an increase in industry players like companies that manage firms and provide marketplaces for securities. These companies are required to pay taxes on earnings which improves the annual fiscal revenue for the nation as a whole.
Companies that go public with stock options are often times more than willing to implement improvements in company functions to make the company more appealing to investors. It is not uncommon for companies to improve accounting and record-keeping practices along with all aspects of corporate governance. This is done in order to facilitate the equitable distribution of more efficiently generated income.
The securities market in Cambodia is growing rapidly. It is expected that more effort and resources will be used to further develop the market. The hopes are that these efforts will achieve the greatest benefit possible for the nation’s economy. This objective is essential to accomplishing the goal of the government to see a marked improvement in areas of the financial sector that does not involve banking.
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