Listing interest lackluster despite upcoming law

Though the new Myanmar Companies Law is less than three months away from being officially enforced, interest to list on the Yangon Stock Exchange (YSX) has not picked up as substantially as expected, said U Thet Tun Oo, senior executive manager of the YSX.

The Myanmar Companies Law, which was enacted December 6, 2017, will come into force on August 1. According to that law, foreign investors will be permitted to take stakes of up to 35 percent in Myanmar companies, including in firms listed on the YSX.

The new rule had been expected to lift interest among local companies to list on the YSX, enabling them to gain access to foreign funds and knowhow. It would also yield fresh opportunities for their shares to rise in value on the back of heavier trading.

Yet, interest to list on the YSX has been as robust as expected, U Thet Tun Oo told The Myanmar Times.

“One of the things we were looking forward to when the law was first enacted was for foreigners to be able to buy shares in the listed companies. This would ideally result in greater liquidity in the equity markets, which is beneficial to the listed companies. But obvious attempts by other local firms to be listed have yet to be seen,” U Thet Tun Oo said.

Time needed

U Maung Maung Thein, former deputy minister for planning and finance, told The Myanmar Times that it could be just a matter of time before trading picks up. “Capital market investments via share trading are rare in Myanmar due to there still being very few listed firms on the YSX,” he said. As such, it will still take time to convince more firms to come to market.

U Sai Ohn Myint, President of Grate Hor Kham Public Co, reckons there’ll be more interest to list after new procedures for trading in shares where foreigners are involved are drafted and implemented.

“If foreigners can invest in on the stock exchange, the capital markets will be stronger. But the new procedures for share trading should first be observed,” he told The Myanmar Times.

Last month, Pedro Jose Bernando, a partner at law firm Kelvin Chia, told The Myanmar Times that while the Company Registration Office has already circulated draft rules on the Companies Law, it will prioritise implementation of an e-registration system over implementing the 35pc threshold.

He added that the 35pc rule will like be rolled out incrementally, to privately-owned Myanmar companies first, before being extended to public-listed companies, if at all.

U Htay Chun, member of the Myanmar Securities Exchange Centre (MSEC) said that once the law is in effect, preparations for foreigners to trade on the YSX will be implemented quickly. However, “securities firms and the listed firms themselves will still need to make adjustments.

“As there are many new processes to sort out, trading in shares by foreigners will likely be feasible by early 2019,” he said.

Trading interest

So far, only three companies have applied to list on the YSX. Within a year, investors should be able to trade shares of engineering company Great Hor Kham, Myanmar Agro Exchange Public Limited and logistics player Ever Flow River -on the exchange.

The trio will join the current five YSX companies – First Myanmar Investment Co, Myanmar Thilawa SEZ Holdings, Myanmar Citizens Bank, First Private Bank and TMH Telecom Public Co – taking the number of listed firms in Myanmar to eight since the bourse officially opened in March 2016.

To promote share trading, the matching of buy and sell orders on the exchange was doubled to four times a day in March. As a result, the volume of shares traded rose 37pc in April, to 9,000 shares. However, the trading lost momentum in May, said U Thet Tun Oo.

Requirements for listing a firm and as well as the taxation system should be relaxed to increase the number of listed firms, he added.

Source : Myanmar Times

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