A mechanism for foreign investors and organisations to take part
in the Yangon Stock Exchange is under development, according to Myanmar
Securities Exchange Centre.
Daily stock trading in Myanmar has declined significantly and the
market is sluggish. In order to revive the trading activities, a system
to include non-Myanmar investors from various sectors must be developed,
MSEC executive director Takashi Takahashi said.
The MSEC and the
Yangon Stock Exchange (YSX) are in collaboration, he said during a
stock exchange education talk held at Parkroyal Hotel on July 19.
“To
make the Myanmar stock market active, what is necessary now is to
develop a system to include investors from various sectors.
“If
that system is successful, there will be more investors in the market.
Right now, there is also a need to attract individual investors,” he
said.
The average volume of daily stock trading in June 2016 was
K313 million but it declined to merely K70 million in June 2017,
resulting in a significant decrease.
Myanmar stock index, with its base point at 1000 on March 25, 2016, dropped to 552.62 on July 11, 2017.
“We can assume that the change is due to traders shunning the market as the stock prices are stagnant.
“To revive the market, it is necessary to have more listed companies and more traders,” Mr Takahashi added.
Under the existing Myanmar Companies Act, a company where a foreigner
has any share is defined as a foreign company. Companies listed on the
YSX have many restrictions in selling their shares to foreigners.
The
government is currently working on a new Companies Act and the draft
piece of legislation has been submitted to the Pyidaungsu Hluttaw. In
the new law, a domestic company is allowed to have up to 30pc foreign
investment.
“Without the participation of wealthy foreigners,
domestic stock market will remain slack. An individual local investor
cannot invest much.
“For foreigners to take part, the Companies
Act must be amended,” Myanmar Agriculture Public (MAPCO) executive
director U Ye Min Aung told The Myanmar Times.
There are only
about 30,000 securities accounts opened for stock trading in the YSX.
Compared to the national population, it is a very small fraction, with
only 0.05pc per head.
Those are accounts owned by individuals, and not
organisation-based accounts.
The YSX, which was established in
December 2015, only has four listed companies on board, while Laos and
Cambodia have five listed ones each. In contrast, Vietnam boasts 695
companies and Thailand 731 companies.
“In other countries,
foreign investors are allowed to take part. Moreover, banks and
insurance firms are seen to be actively trading in the stock market,” Mr
Takahashi said.
Source - MM TIMES
