Dollarization remains high in Cambodia

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Stock Market

CSX index closes 0.81% lower amid mixed stock performances On May 21, 2024, the CSX index closed at 412.0 points, down 0.81% from the previous day. The main board showed mixed results: PPAP (+0.75%), MJQE (+0.49%), PEPC (+0.46%), and CGSM (+0.41%) posted gains, while ABC (-2.84%), PWSA (-1.64%), PPSP (-1.35%), GTI (-0.87%), and PAS (-0.64%) saw declines. On the growth board, JSL remained unchanged, whereas DBDE was down by 0.45%. The total trading volume was 193,842 shares, with a cumulative trading value of KHR 1,099 million. (Source: YSC Research)

Economy and Industry

Dollarization remains high in Cambodia According to the Annual Financial Stability Review (FSR) report 2023 of the NBC, dollarization within the economy remains high, while the share of local currency has slightly increased. Most bank loans are still in US dollars, but riel-backed loans are slowly rising, attributed to NBC's efforts to boost liquidity through tools like Negotiable Certificates of Deposit (NCDs) and Liquidity Providing Collateralized Operation (LPCO). US-denominated NCDs issuance dropped 84.5% to USD 5.2 billion, while KHR-denominated NCDs issuance fell 2.1% to KHR 17 trillion. LPCO provided KHR 2.5 trillion in liquidity, up 64.3% from 2022. NBC highlighted the growing popularity of the KHQR and Bakong system in promoting Khmer riel use. Despite reduced inflation, dollarization remains high, driven by food and fuel costs. NBC noted Cambodia's resilient economy, citing factors like a stable exchange rate and adequate international reserves. (Source: Khmer Times)

FDI inflows into manufacturing sector remains resilient The Annual Financial Stability Review Report 2023 NBC revealed that foreign direct investment (FDI) inflows into manufacturing remained robust, following investment into construction and real estate. While FDI inflows rebounded overall, they varied across sectors. Manufacturing witnessed increased funding over five years, followed by construction and real estate, while other sectors saw stable inflows or reductions. In 2023, China accounted for the highest FDI inflows (56%), trailed by Korea and Canada. Economic growth, mainly driven by manufacturing and services, reached 5%, with manufacturing contributing the most. Although international arrivals improved in 2023 compared to the pandemic period, quality of recovery remains a concern, with fewer affluent tourists arriving by air, though waterway arrivals increased. (Source: Khmer Times)

Cambodia and Korea to establish trade consultation channel Cambodia and South Korea are set to enhance trade and investment cooperation through 'Regular Consultation Sessions,' as agreed upon during talks between Prime Minister Hun Manet and South Korean President Yoon Suk Yeol in Seoul. The leaders discussed bilateral cooperation, including infrastructure development and trade connectivity, and planned two major projects: the establishment of consultation sessions between Korean companies and the CDC, and the creation of a special economic zone (SEZ) to facilitate Korean investments. Additionally, discussions included the proposed Cambodia-Korea Friendship Bridge. At the Cambodia-Korea Business Forum, CCC President Kith Meng emphasized the strong bilateral friendship and the potential for deeper cooperation. The leaders underscored the importance of enhancing digital trade, intellectual property, and supply chains, with a focus on SMEs and high-tech industries. The trip, accompanied by key officials, signifies a renewed commitment to bolstering ties and fostering a conducive business environment for investors in both countries. (Source: Khmer Times)

Corporate News

MJQE announces 7% dividend amidst strong financial performance In an interview with Cambodia Investment Review's Leader Talks, Dr. Mengly J. Quach, Founder, Chairman, and CEO of Mengly J. Quach Education (MJQE), discusses the company's remarkable stock performance, solid business model, and ambitious expansion plans. Following its IPO last year, MJQE's stock has seen significant growth, driven by strong financial results and increasing public support. As Cambodia's first education company listed on the CSX, MJQE continues to uphold standards of quality education while expanding nationwide. With its successful IPO raising $5,082,770 and attracting 2,310 investors, MJQE stands as the second-largest IPO in Cambodia's stock market history in terms of investor participation. Since the IPO, MJQE's stock has outperformed expectations, with shares consistently ranking high in daily trading volumes and a notable increase in price. Dr. Quach attributes this success to factors including global economic conditions, political stability, favorable monetary policies, and the company's robust earnings, as well as trust from the public and parents. (Source: Khmer Times)

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