Myanmar prepares to let foreigners trade local stocks from March

by BLOOMBERG/ pic by BLOOMBERG

YANGON • Myanmar plans to let some foreigners trade local stocks from March in an initial step toward expanding the country’s small bourse.

Expatriates residing in the nation will be the first allowed to trade on the Yangon Stock Exchange, with permission for other foreigners coming later in stages, Htay Chun, a commissioner at the Securities and Exchange Commission of Myanmar, said in an interview on Tuesday in Yangon.

Allowing foreigners to buy stocks is one of the ways Myanmar hopes to bolster its otherwise moribund Myanpix equity index, which is almost four years old, but has only five stocks.

Critics say the long-delayed step is an example of the slow pace of regulatory change in the South-East Asian nation.

Myanmar also plans to establish a Second Board with looser listing rules than the Main Market. Htay Chun said foreigners would be allowed to trade on the Second Board, and that it may be set up by the third quarter of the year.

“We’re aiming to have as many as 10 companies on the Second Board when it launches,” he said. Foreigners could make up 15% of Myanmar’s stock trading initially, rising to as much as 40% eventually, Ryota Sugishita, chief consultant at Japan’s Daiwa Institute of Research, said last year.

Existing rules allow overseas investors to own a maximum 35% of a local company. Firms must meet 17 criteria to be eligible for listing on the Main Board, such as being profitable for at least two years and having a minimum of 100 shareholders.

In the bond market, the securities regulator is working toward a framework that would allow companies to issue bonds potentially as early as the second half of 2020, Htay Chun said.

Public backing from senior politicians like de facto leader Aung San Suu Kyi would help Myanmar deepen its capital markets, he said.

“If they stressed the importance of the capital markets, more people would be interested in investing here,” Chun added.