Foreign participation in YSX likely to bump up share prices: official

YSX Photo Phoe Khwar 1 copy
YSX has increased the stock trade matching time from two to four per day. Photo: Phoe Khwar

With foreign investors being allowed to buy shares listed on the Yangon Stock Exchange, the prices of shares are likely to rise as foreign participation in the stock market increases, said U Thet Htun Oo, the executive senior manager of the YSX.
“Normally, foreign participation in a stock exchange shows market potential. But, foreign investors will invest carefully in local companies before taking any major investment decision. If there is potential in their investment, they will consider it. If they closely participate in the stock market, the prices of shares will go up,” said U Thet Htun Oo.
The Securities and Exchange Commission of Myanmar, under the Ministry of Planning and Finance, recently issued a press statement announcing that foreigners are now allowed to invest in shares listed on the YSX.
“Under the Myanmar Companies Law, foreigners are allowed to buy up to 35 per cent of the stocks of local companies. The securities companies and the YSX will monitor them so that they do not exceed this limit. Foreigners will be allowed to start trading shares on the YSX in three months, as some steps involved in opening up the stock market to them are still under process,” said U Thet Htun Oo.
At present, shares of five listed companies — First Myanmar Investment (FMI), Myanmar Thilawa SEZ Holdings (MTSH), Myanmar Citizens Bank (MCB), First Private Bank (FPB), and TMH Telecom Public Co. Ltd. — are being traded on the stock exchange.
There are three main steps involved in allowing foreign participation in the stock market, said U Thet Htun Oo.
“First, the Securities and Exchange Commission will release regulations and guidelines for foreign participation in the YSX, in accordance with the Companies law. Second, the YSX and Securities Companies will draw up procedures and systems for controlling the daily trades of foreigners abiding by the rules and regulations. Third, all YSX-listed companies will have to register again with the DICA office and extraordinary meetings will have to be conducted to get approval for foreigners holding stakes in their respective companies,” he said.
To encourage trading, the YSX has increased the stock trade matching time from two to four per day. In addition to this, it also held a promotional event to attract new investors and encourage existing investors to trade more actively.
Investors in the Yangon Stock Exchange mainly concentrate on dividends paid by the companies, rather than capital gains from trading stocks.
In January, 89,576 shares worth K526 million were traded on the exchange, and the trade value slid to K409 million and K396 million in February and March, respectively, as share prices decreased. In April, 102,682 shares worth K506 million were traded on the YSX. The value of shares traded was the highest this year in May at K1.4 billion, with 275,325 stocks traded. In the month of June, 233,994 shares worth around K1.32 billion were traded on the exchange, according to the monthly report of the YSX.
In June, the shares of FMI closed at K11,500, MTSH at K3,400, MCB at K7,900, FPB at K24,000, and TMH at K3,050. While the volume of trade was lower in June compared to May, the price of shares registered an increase.
“The YSX was launched three years ago to improve the private business sector. We disseminate the rules and regulations of the stock exchange through stock investment seminars,” said U Thet Tun Oo.
The YSX has also sought the government’s support to get more public companies to participate in the stock market and to help more institutional investors, such as financing companies, investment banks, and insurance companies, to emerge.
More than 2.5 million shares of three listed companies were traded on the YSX in 2016, and their value was estimated at K70 billion. In 2017, despite an increase in the stock trading volume to 2.6 million shares, the value of shares traded was only K22 billion. In 2018, 2.3 million shares of five companies, worth K11.5 billion, were traded on the exchange, according to the annual report of the YSX.—Zar Ni Maung/ Ko Htet (Translated by Ei Myat Mon)

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