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Myanmar’s $400m stock market to open to foreigners

Myanmar will allow direct foreign ownership of shares at the Yangon Stock Exchange (YSX), a move designed to throw a lifeline to the country’s only bourse.

In a notice on Friday, the regulator, the Securities and Exchange Commission of Myanmar, said foreign individuals and locally-registered entities would be allowed to invest in listed shares of up to 35pc.

No timeline was given but Ko Aung Thaw Zin, research analyst at business information firm Frontier Myanmar Research (FMR), expects such trading to start by year end.

“It’s unclear [from the notice] whether both resident and non-resident foreigners will be permitted to trade. I understand the SECM has already prepared the follow-on regulations, which is likely to allow [only] resident foreigners,” he added.

The new Companies Law, which entered into force last August, opened the stock exchange to non-Myanmar investors. The legislation allows foreign individuals and entities to hold up to a 35pc minority stake in Myanmar companies without those firms losing the domestic registration required to be listed. But to date the authorities have not implemented this law.

The reform, when implemented, should spark interest from retail investors based in Yangon, Ko Aung Thaw Zin said. But institutional investors, including global asset and fund managers, are likely to be interested only when the YSX has significantly more listings and a broader diversity of sectors represented by its listed equities.

Securing investor confidence depends on improving corporate governance and protection of minority shareholders, market watchers say. Myanmar performs the most poorly (out of 190 countries) in protecting minority investors (185th), according to the World Bank’s 2019 Ease of Doing Business ranking.

The move should scale up the stock market and provide an additional source of financing for domestic companies, driving the development of Myanmar’s financial markets and economic growth in the long term, said Sten te Vogt, an economist at Mekong Economics based in Yangon.

“The question is whether local companies are ready to meet the compliance and transparency standards of international investors,” he told The Myanmar Times.

The YSX was incorporated with a paid-up capital of US$22.6 million in December 2014 and welcomed its first initial public offering in January 2018. With five listed companies, the bourse is small and limited in liquidity, with daily volume of US$35,000 as of July 12, and a market capitalisation of around $400 million.

This is a developing story and will be updated soon. The story was last updated at 13.50, July 14.

Source: Myanmar Times

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