Tuesday, September 19, 2017

Shares of 55 companies can soon be traded locally

55 public companies which were given the green light to sell shares in the local over-the-counter (OTC) market must receive official permission from the Securities and Exchange Commission of Myanmar (SECM) first, U Htay Chun, member of the commission, told The Myanmar Times.

A list of 55 companies including those listed on the YSX will soon be tradeable on the OPC market. The Myanmar TimesA list of 55 companies including those listed on the YSX will soon be tradeable on the OPC market. The Myanmar Times

The announcement comes a day after the Directorate of Investment and Company Administration (DICA) on August 15 released the list of 55 public companies which have been allowed to sell their shares outside the Yangon Stock Exchange (YSE).

OTC trading is done directly between two parties without the supervision of an exchange.

As there have been incidents during which shares have been sold illegally in the past, the State will now permit only the 55 companies selected to sell shares locally.

However, new rules under the Myanmar Securities Exchange Law stipulate that the companies must first receive permission from the SECM if they want to sell shares, said U Htay Chun.

“DICA selected the list of 55 public companies specifically so that the public can avoid trading in the shares of companies without permission to sell their shares,” said U Htay Chun.

But these companies were given permission before the Myanmar Securities Exchange Law was enacted. Of the 55 public companies announced by DICA, four are currently also listed on the Yangon Stock Exchange. They are First Myanmar Investment Company, Myanmar Thilawa SEZ Holdings Public Limited, Myanmar Citizens Bank and First Private Bank.

Currently, SECM allows only two companies, Yangon Bus Public Company and Myanmar Agro Exchange Public, which are not listed on the YSX, to sell shares on the OTC market.

Among the other companies that will be able to sell shares are Myanmar Agribusiness Public Corporation, Union of Myanmar Economic Holdings Limited Company and Myanmar Telecommunication Network Public Company Limited.

The move comes after trading volumes on the YSX have fallen significantly. At the last close on Aug 16, the Myanmar Stock Price Index (MYANPIX), which represents price fluctuations of the overall stock market, had dropped to 449.69 points, with a total of 17,019 shares worth K142.19 million traded, according to data on the YSX.

When the MYANPIX first launched on March 28, 2016, the index closed the day at 1,161.29 points. A total of 207,532 shares worth K7.4 billion changed hands. Since then, the YSX has lost over a quarter of its value. It now has a market capitalisation of K624.26 billion.

Listing on the YSX also involves arduous conditions that many companies fail to meet. Since its launch, only four companies have listed on the YSX. Based on its listing criteria, a company must be registered under the Myanmar Companies Act, have at least 100 shareholders and minimum paid-up capital of K500 million on the date of application. Meanwhile, it must also be profitable for at least two years prior to listing, among other criteria. Excluding preliminary preparations, the YSX estimates that the process of listing on the YSX currently takes approximately 18 months.

Up until recently (see ‘YSX-listed firms to enjoy 5pc tax deduction’), companies were also subject to hefty taxes of up to 25 percent.