On the 25th of March, Myanmar reached a new milestone in shifting the country from a having closed economy to a modern financial system. Announced last year, the long awaited Yangon Stock Exchange (YSX) was finally initiated – and most seem to agree that it was a very auspicious start.
The stock exchange marks the first step of moving the country from its traditional outdated way of asset management to a more modern financial system. For as long as history goes, Myanmar’s residents have been starved of investment options. Because the majority of the people have little to no savings, it is even more crucial to give them a means to save.
Middle and higher income people only are only 10% of Myanmar’s population and are thought to have abundant wealth. However, only a small minority store their wealth in the form of the nation’s currency, the Kyat, and an even smaller proportion trust banks to keep it for them. This is because of incidents that occurred during the junta era that led to many banknotes becoming worthless.
As of 2013, with 70% of the country’s adults having little to no access to formal financial services, most of their savings vehicles were in the form of gold, foreign currencies, or ancient collectors items.
Public Markets and Stocks: A New Growth Engine for Myanmar
One of the goals of YSX is not only to provide a new channel of asset management, but also to improve Myanmar’s transparency.
Currently, Myanmar ranks 147th out of 168th on Transparency International’s Corruption Perceptions Index amid rampant reports of money laundering. The Yangon Stock Exchange, which lists Japan’s Daiwa Securities and Japan Exchange Group as co-owners, would lend it credibility and improve the image of the country as a whole.
The initial success achieved by the current listing of First Myanmar Investment is expected to fuel the desires of many other firms to raise their standards of governance, accounting, and transparency.
Successful Opening of the YSX
The first day of the YSX was hailed as a success. People were so eager to invest their wealth into equities, something that has never been possible for the public, that long queues were formed since dawn.
First Myanmar Investment, better known as FMI locally, reported that over 100,000 shares traded hands with each share priced around $20. Its share price closed up by around 20% on its first day of trading.
The head of FMI, Serge Pun, said in a press conference that he was delightfully surprised about the results of the first day, especially with the fact that people were lining up for hours just to get into the few licensed securities firm to buy.
FMI is the first company to be listed but it won’t be the last. Scheduled to join the YSX in just a few weeks is Myanmar Thilawa SEZ Holdings, the operator of a Special Economic Zone (SEZ) with Japanese interest.
The authorities’ and the YSX management’s goal is to make sure that Myanmar’s exchange does not end up like those of neighboring countries Laos and Cambodia. Even though they were both initiated in 2011, their number of total listings add up to just 7.
It will not just be the the owners of YSX who will be shaping the future. To increase the chances of YSX’s success, the newly elected government led by Aung San Suu Kyi’s National League for Democracy will also need to take proper actions to shape the environment for a more transparent corporate sector.