Sunday, August 20, 2017

Yangon stock exchange to open to foreign investors

The Securities and Exchange Commission of Myanmar is preparing to allow foreign investors to access the new Yangon Stock Exchange and for local-foreign joint ventures to list, chair U Maung Maung Win said.

Investors queue to open accounts outside KBZ Stirling Coleman Securities.(Nyan Zay Htet / The Myanmar Times)Investors queue to open accounts outside KBZ Stirling Coleman Securities.(Nyan Zay Htet / The Myanmar Times)

An “appropriate” number of joint venture companies will be given permission to go public as soon as the new Myanmar Companies Act is passed, while institutions from overseas will be invited to invest to encourage market liquidity, he told The Myanmar Times.

The law is expected to be passed this year, he said. “This is beginning of the journey. Every step is not easy in the initial stages; we will need international assistance to develop the market.”

Earlier this month the US government tweaked its sanctions program on Myanmar, removing restrictions on state-owned Myanma Economic Bank, which owns a majority share in the YSX, and clearing the way for US banks and individuals to do business with the exchange.

“The stock market needs to be developed to a regional and international standard, and SECM is responsible for managing this. It’s important to boost the capital of our companies,” he said.

U Maung Maung Win, who is also permanent secretary at the finance ministry, was appointed chair of the SECM earlier this month.

A former senior official at the central Central Bank, he was also involved in drafting a road map for capital market development when he worked for state-owned Myanma Economic Bank in 2003.

The SECM will continue to promote better auditing and corporate governance to support companies to raise capital, particularly those wanting to launch an initial public offering, he said. Companies can find the requirements for listing and compiling a prospectus on the SECM website.

The two firms to list on the exchange so far – First Myanmar

Investment and Myanmar Thilawa SEZ Holdings Public – have simply transferred existing shares to the exchange and have raised no fresh capital. An IPO involves raising money from the public through issuing new shares.

Four more companies – Myanmar Citizens Bank, First Private Bank, Myanmar Agribusiness Corporation Limited (MAPCO) and Great Hor Kham – are preparing to list, though none will raise new capital.

The SECM supervises securities companies, oversees trading on the YSX and protects investors within the legal frameworks, to develop a stable market over the long term, U Maung Maung Win said.

“Our SEC officials are also responsible for investigating and monitoring the market at all times,” he said.

Five securities firms – AYAtrust Securities, CB Securities, KBZ Stirling Coleman Securities, KTZ Ruby Securities and Myanmar Securities Exchange Centre – have already opened. Two more, Expert Investment Securites and Global World Securities, are preparing to meet SECM’s criteria.

Stronger regulatory infrastructure is needed for the exchange to grow, the SECM chair added. Japan, which owns 49 percent of the YSX, offers the most support, while relations are also strong with India, Thailand and other ASEAN countries.

Japan’s Daiwa has been involved in the development of the stock exchange since 1996 when it opened the Myanmar Securities Exchange Centre, an over-the-counter market.

Daiwa Institute of Research partly owns the Yangon Stock Exchange, while Daiwa Securities Group holds an underwriter licence. Another Daiwa arm, Myanmar Corporate Strategic Advisory operated as a listing advisory firm from 2014 but was recently wound up.