This is the question facing regulators across Asia’s emerging markets. Some of them have recently established exchanges. Others are wondering how to reinvigorate decades-old, lacklustre institutions. No one finds the task easy.
Cambodia and Kazakhstan, in their own ways, face this conundrum. They are both trying to add some life to domestic financial systems that have relied too much on relationship lending, eschewing the real benefits that capital markets offer for pricing and distributing risk.
The Cambodia Securities Exchange, launched in 2011 but almost entirely bereft of deals until now, at least has the distinct benefit of a domestic monopoly, albeit a monopoly in a non-existent market. The Astana International Exchange, established in 2017 but only trading since late 2018, cannot even make this small boast. It is the country’s second stock market, and one of the regular questions its chief faces is how it will compete with its local rival.
The two exchanges are both making admirable efforts, but the truth is they have their work cut out for them. Outside China, Hong Kong and Singapore, few Asian exchanges have changed the landscape of their domestic markets – and all remain sideshows to the big global players.