Myanmar has shown rapid improvement and modernization in the past couple of years. Steps the country has taken include changing to an elected government and bringing in record foreign investment.
The Southeast Asian country took yet another step towards the country’s development. Myanmar officially launched its first stock exchange, on Wednesday 9th December, 2015.
This a milestone in Myanmar. A once closed country with almost zero foreign direct investment achieved record FDI of US$8 billion during the 2014-15 fiscal year. Multinationals like Coca-Cola, Colgate, and Mitsubishi rushed to Myanmar to realize the full potential of its emerging consumer boom.
More recently, Myanmar saw one of its most clean elections in history. The people’s favorite party under Daw Aung San Suu Kyi took a landslide victory against the longstanding party of retired government officials and minority parties. Myanmar received universal praise for this fully democratic election.
Myanmar is Open for Business
Steps towards modernization wouldn’t have been possible if the country didn’t open its doors to the global economy. 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.
The Yangon Stock Exchange (YSX) isn’t any different. Co-founded by the state-owned Myanmar Economic Bank Daiwa Securities, along with the Tokyo Stock Exchange, YSX is an investment 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. He also mention that it could make local companies more attractive to work for and counteract Myanmar’s brain-drain.
With rising optimism also comes caution. The Myanmar stock exchange will take a long time to become fully active and a legitimate stock exchange platform.
Myanmar Stock Exchange is Only the First Step
Many experts agree that the country as a whole needs stricter rules and regulations for the Yangon Stock Exchange to play a major role in the Myanmar economy. There’s some truth in these words. In fact, there’s still no rules about 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 he expects at least seven companies to join the YSX at the very star. These include the local big name players like Myanmar Thilawa Public Company, First Myanmar Investment, and Myanmar Citizens Bank.
He expects the Myanmar 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 more than $19 billion.
There’s still hope that the Yangon Stock Exchange will start strong. Earlier this year, 57 companies applied for a license in one of four categories offered within the YSX.
Can Myanmar overcome its bureaucracy and become a frontier market worthy of investment? Time will tell.
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