Luang Prabang
A buddhist temple is visited by a western tourist in Laos' old royal capital of Luang Prabang. REUTERS/Str Old

While the recent volatility in the Bangladesh stock market raises worries about investing in the so-called “frontier markets,” another developing country, Laos, has opened its own new stock market.

The Lao Securities Exchange opened on Tuesday with only two companies (Electricite du Laos Generation company and Banque Pour Le Commerce Exterieur Lao) trading. However, it represents a significant plunge into capitalism for the Communist nation.

Trading volume on the first day was very modest, about $265,000.

According to a BBC report, the Laos exchange hopes to raise $8-billion in stock and bond sales to generate investment into the country over the next five years.

I hope investors will support the endeavors of our stock exchange, said Dethphouvang Moularat, the head of the exchange, after a small opening ceremony.

Vathana Dalaloy, the acting secretary general of Laos’s Securities and Exchange Commission, said the exchange may add three more stocks this year.

Financing for establishing the exchange came from South Korea, which has poured in $9.8-million (or 49 percent of total funding) with the remainder coming from The Bank of Laos.

Laos, one of the poorest nations on earth with almost no infrastructure and dominated by subsistence farming, hopes to eventually join the World Trade Organization.

The country is however rich in natural resources and seeks to emulate the economic success of its neighbor Vietnam.