Deputy Minister lays out path to stock exchange

Up to 10 companies ought to meet the requirements to be listed on the Yangon Stock Exchange (YSX) when it opens in October – though these requirements have still not been released, according to deputy finance minister U Maung Maung Thein.

While agreements have been signed to establish the exchange and much of the technical infrastructure is in place, not all the rules and regulations needed to licence securities players and govern the exchange have yet to be finished.

Companies are not yet certain what the requirements will be to list on the YSX, as they have also not been revealed – though draft sets of requirements have been publically discussed.

Myanmar and Brunei are now the last ASEAN members without a stock exchange, as several countries have opened them in recent years. Myanmar has an existing over-the-counter exchange that can trade shares in two companies, though it is not considered a modern stock market.

“As a democratic country, we need [a stock exchange],” said U Maung Maung Thein. “It is one of the characteristics of a market economy.”

“In the world there are only nine countries that don’t have an exchange, including Myanmar. Six of them are small island countries, and the other two are North Korea and Brunei,” he said.

Although industry insiders say it is likey there will be around four or five companies ready to list in October, U Maung Maung Thein told The Myanmar Times about 10 could be ready when the exchange launches.

Other regional exchanges have gotten off to slow starts. Cambodia’s exchange opened in 2011 with no listed companies, and currently has two, while Laos opened its exchange in 2011 with incomplete rules.

U Maung Maung Thein said on the sidelines of a seminar last week that the challenges are different in each country. For instance Laos only has a handful of public companies to draw from for listings, while Myanmar currently has over 200 public companies.

“So when the [Securities Exchange Commission] announces the criteria to be listed on the exchange, [companies] will try to be eligible,” he said. “It will not be a problem even though we are starting with a few companies. In the future more will be eligible.”

U Maung Maung Thein said the Yangon Stock Exchange will start only with quality companies, as it is important to make the market safe for investors before expanding.

So far at least three local firms – First Myanmar Investment, Asia Green Development Bank and Myanmar Agri-business Public Company – have declared intention to list.

Several other public companies have also quietly begun preparing to list on the exchange, meaning some firms will require comparatively minor changes to meet the criteria – should they ultimately choose to do.

U Aung Thura, CEO of Thura Swiss, said internationally, listed companies must be transparent and have clear record-keeping systems, and local companies interested in the exchange must do the same.

U Maung Maung Thein said the listing criteria has yet to be announced, but would be coming soon.

“There will be enough time for the companies to prepare. And the criteria will comprise nine or 10 points – but I can’t reveal it now.”

Myanmar will have other unique challenges. While many international firms that list on foreign exchanges are private that then transition to public companies, Myanmar already has over 200 public companies – though often of vastly different quality.

Some, like Myanmar Thilawa SEZ Public Limited, have issued a prospectus and tried to inform the public about the company, which is part of the consortium developing Thilawa Special Economic Zone, said its chair U Win Aung.

“We have described what business we are going to do, how much the investment is, who the people are who are included – our backgrounds and so forth,” he said.

U Maung Maung Thein said the situation in each country is unique.

“The point is that each country has its own trends – but we have to overcome these unique challenges,” he said. “[Myanmar] has never set up a stock market, so there will be many challenges.”

U Maung Maung Thein also said that the current over-the-counter trade in these public companies will eventually be banned.

“The Finance Ministry already plans to announce a notice issuing a ban. But by doing this, we mean to control it with proper regulations,” he said. “Many people are buying companies’ shares without studying the prospects.”

Companies interested in applying to be underwriters, dealers, brokers and consultants may start applying from the third week of January, said U Maung Maung Thein.

Although officials are keen to see the market take off in October, there is lots to do to ensure it is a success.


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