Features Myanmar Financials

Investor interest grows as Yangon Stock Exchange opens to foreigners

11, Mar. 2020

Local investors in Myanmar scan share prices on an electric signboard at the Yangon Stock Exchange in Yangon on Feb. 10, 2020. (NNA)
Local investors in Myanmar scan share prices on an electric signboard at the Yangon Stock Exchange in Yangon on Feb. 10, 2020. (NNA)

By Mami Saito

YANGON, NNA - The long-awaited liberalization of trading to foreigners at the Yangon Stock Exchange (YSX) on March 20 has sparked interest among investors anticipating better stock performance.

On Tuesday, financial institutions in Myanmar began to accept foreign applications for brokerage accounts to trade at the YSX, the country's first stock exchange that was launched in March 2016.

The participation of foreign investors is expected to vitalize the stock market in Myanmar where share prices have remained sluggish because only locals and Myanmar-owned companies were allowed to trade in the past four years.

Also, only five companies are listed on the bourse. They include First Myanmar Investment Public Co., a subsidiary of Serge Pun & Associates Group, and Myanmar Thilawa SEZ Holdings Public Ltd., which is developing the Thilawa Special Economic Zone on the outskirts of Yangon.

The other three are Myanmar Citizens Bank Ltd, First Private Bank Ltd.and TMH Telecom Public Co. Ever Flow River Public Co., a major local logistics service provider, will be the sixth company to be listed on March 20.

Yangon Stock Exchange Joint Venture Co., the operator of the exchange, was established under a joint venture by the Myanmar Economic Bank, Japan's Daiwa Institute of Research Ltd. and Japan Exchange Group Inc. (JPX).

The Securities and Exchange Commission (SEC) of Myanmar has stated that foreign individuals and locally-registered companies would be allowed to invest up to 35 percent in listed shares. The cap is necessary to ensure that local companies do not lose their registration required for them to be listed.

Hideki Matsushita, 55, a Japanese resident living in Yangon, became the first foreigner to open an account at the Myanmar Securities Exchange Centre (MSEC), a local subsidiary of Japan's Daiwa Securities Group Inc.

Matsushita, chief operating officer of Yangon-based Tokio Investment Co., said he will invest the company's funds in listed shares as he has confidence in the growth of Myanmar.

Matsushita, who has seen Myanmar's seven-year civilian rule, said, "The opening of the stock market to foreigners will help draw foreign investors' attention to Myanmar. We'd like to hold shares over a long period and contribute to Myanmar's economic growth."

Hideki Matsushita (L) is the first foreigner to open a securities account at the Myanmar Securities Exchange Centre in Yangon on March 10. 2020. (NNA)
Hideki Matsushita (L) is the first foreigner to open a securities account at the Myanmar Securities Exchange Centre in Yangon on March 10. 2020. (NNA)

A Myanmar investor said foreign participation especially from China will likely push up share prices. He believes Chinese investors will trade actively once the threat of the coronavirus outbreak gets under control.

Welcoming the liberalization, MSEC Managing Director Takashi Yamaguchi said the move "will undoubtedly give a boost to the market." His company noted that about 50 to 60 potential foreign customers have indicated interest.

Currently, Myanmar investors hold some 40,000 securities accounts at six brokerages operating in the Southeast Asian country. This includes MSEC, the only brokerage affiliated with Japanese companies as well as a major local bank.

A foreign investor will be allowed to hold one account only. Non-residents will be required to visit Myanmar to go through the necessary procedures to open an account.

Most securities companies can issue a letter of recommendation immediately. However, there are concerns whether banks could play their part in processing fast enough.

MYNPIX, YSX's key index, came down 0.71 percent to 476.70 on Tuesday - in step with the regional downtrend following jitters over the oil price war.