Myanmar has shown rapid improvement and modernization in the past couple of years. Steps the country has taken include a change from a junta regime to a democratically elected government, as well as bringing in record foreign investment. The Southeast Asian country recently took yet another step towards the country’s development by officially launching the Yangon Stock Exchange, Myanmar’s first, on Wednesday 9th December, 2015.
This marks another milestone in the rapidly changing Myanmar. What was once a closed country with close to zero foreign direct investment has achieved record FDI of US$8 billion during the 2014-15 fiscal year as multinationals such as Coca-Cola, Colgate Palmolive, Mitsubishi and Telenor rushed into the country in order to realize the full potential of the emerging consumer boom.
More recently, Myanmar has seen one of the most clean elections in the nation’s history with the people’s favorite party under Daw Aung San Suu Kyi taking a landslide victory against the longstanding party of mostly retired government officials and minority parties. The country received universal praise for organizing an election at this level.
Myanmar is Open for Business
Steps towards modernization would not have been possible at this pace if the country had not ‘opened’ its doors to the rest of the world. From being one of the most isolated countries in the world with an unbelievably high number of sanctions, Myanmar has turned to one of the fastest developing countries in Southeast Asia.
And it is no different with the Yangon Stock Exchange (YSX). Co-founded by the local state-owned Myanmar Economic Bank Daiwa Securities and the more experienced operators of the Tokyo Stock Exchange, Japan Exchange Group, YSX is an investment reported to be valued at around US$25 million.
There is a lot of optimism revolving around the establishment of YSX. The head of Telenor Myanmar, Petter Furberg, expressed his hope that this is the first step towards developing a debt capital market which could even prove useful for international companies such as the one he belongs to. He also mentioned that this could make local companies more attractive to work for and counteract the “brain-drain”
With rising optimism also comes caution. The Yangon Stock Exchange will take a long time to become fully active and a legitimate stock exchange platform.
The Yangon Stock Exchange is Only the First Step
Many experts agree that the country as a whole needs a much more stringent set of rules and regulations in order for the Yangon Stock Exchange to play a major role in the Myanmar economy. There is some truth in these words as there are still no rules regarding policies on company disclosures, shareholder voting, or annual general meetings.
The registration process needs to be laid out more transparently as well. Also the initial public offering (IPO) requirements would have to be less stringent to favor a more efficient stock exchange.
There are a few who have voiced out their fear that the Yangon Stock Exchange could follow along its neighbors’ paths to failure. The Cambodian Securities Exchange (CSX) and Laos Securities Exchange (LSX) only have two and four listed companies respectively. Both exchanges are not even on most investor’s radar due to their lack of activity.
However, officials are certain that YSX will not follow down such a path. Deputy Finance Minister Maung Maung Thein said in a press release that the will be expecting at least seven companies to join the YSX at the very start, including the local big name players like Myanmar Thilawa Public Company, First Myanmar Investment, and Myanmar Citizens Bank.
He expects the Yangon Stock Exchange to be as robust as Vietnam’s Ho Chi Minh Stock Exchange within three years. Vietnam boasts the most active stock exchange in the region with over 300 stocks traded and a market cap of over $19 billion.
There is some hope that the Yangon Stock Exchange will be starting strong. Earlier this year, 57 companies applied for a license in one of four categories offered within the YSX, with 20 bidding for underwriters, two dealers, five brokers, and 30 consultants.