Frontier Markets: Laos Rising

I’m not sure what the listing criteria is for the website world-stock-exchanges.net, but they list the Maldives Stock Exchange with its six holdings and not Laos with its four. Founded in 2011 with the support of South Korea’s stock exchange (which owns 49%), the Laos Securities Exchange occupies a five story ultra-modern glass building in the capital city of Vientiane

The four companies listed are:  Banque Pour Le Commerce Exterieur Lao (BCEL), EDL Generation (EDL-Gen), Lao World (LWPC), and Petroleum Trading Lao (PTL). Needless to say the stocks don’t trade daily, however, establishing this exchange has been a huge step in the right direction for Laos. For years it appeared as if the country would not embrace capitalism in any form, and would instead remain a dinosaur of the 1960s communist era. But I am pleased to see the country is dipping its toe in the water, maybe because they see all the rapid development in the countries around them.

Just as in Cambodia, Laos has launched Special Economic Zones (SEZs) to help boost their economy. A recent article in The Nation details the extent to which these SEZs have succeeded in creating new jobs. Currently Laos has 11 such zones, and companies from as far and wide as Canada and the Netherlands have registered there. Of note is Toyota from Japan who is building a manufacturing plant in one of the zones. Additionally, Chinese companies, along with the Chinese government, have stated that they are looking to invest upwards of 30 billion dollars in the economic zone along the Laotian border with China.

Why all the recent interest in Laos? One reason is the constant search by multi-national companies for new opportunities in places with low labor costs and low taxes. And as workers in countries like India, Bangladesh, Indonesia, and the Philippines become more affluent, they are demanding higher wages. Hence the expansion into lower wage based nations like Laos, Vietnam, and Cambodia. As far as China is concerned, they have been aggressively courting Laos because of its geographic location. China is looking to develop a transportation hub, including an airport and a railway junction, which will link their country to the rest of Southeastern Asia.

So if Cambodia is any example, Laos could be on its way to a boom in real estate. Property values in Laos, and especially Vientiane, may soon be on the rise. For anyone interested in investing in real estate, this may be the time to begin.

Source: NASDAQ