On the 25th of March, Myanmar reached a milestone in shifting the country from a closed economy to a modern system. The long awaited Yangon Stock Exchange (YSX) was initiated – and most seem to agree that it was an auspicious start.

The Yangon Stock Exchange marks the first step of moving the country from its traditional 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 have little to no savings, it’s even more crucial to give them a means to do so.

Middle and higher income people only are only 10% of Myanmar’s population and are thought to have abundant wealth. However, few store their wealth in the form of the nation’s currency, the Kyat.  Even less 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.

With 70% of the population having little or no access to financial services, most of their savings are in the form of gold 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 Myanmar Stock Exchange

The first day of the Yangon Stock Exchange 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 Yangon Stock Exchange 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 the Yangon Stock Exchange 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.

The Yangon Stock Exchange marks a step in the right direction. But Myanmar still has many things it must do to continue on the right path forward.

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