Myanmar: Rules for foreigners to trade on YSX issued this month

Policy and regulations allowing foreigners to trade on the Yangon Stock Exchange (YSX) will be released by late August, according to U Htay Chun, member of the Securities and Exchange Commission of Myanmar (SECM).

“We are working towards announcing the required regulations and policy instructions by the end of this month. Meanwhile, the YSX-listed companies and securities companies are still making preparations. Once the instructions are released, listed firms which are ready will be able to sell shares to foreigners,” U Htay Chun told The Myanmar Times yesterday.

Though the Myanmar Companies Law was passed in December last year, there have been delays in enforcing the rules, regulations and procedural instructions for foreigners to participate in stock trading on the YSX.

“To be able to sell shares to foreigners because of the Myanmar Companies Law is a good opportunity for our firm. But so far, we have not received the rules on how to commence trading with foreigners yet. We need the announcements to be made quickly for more liquidity in the capital market,” U Serge Pun, chair of YSX-listed First Myanmar Investment Co (FMI), said during the company’s AGM on July 29.

At present, only local investors are allowed to take part in stock trading on the YSX. However, the capital market of Myanmar has yet to develop to its full potential, officials from the YSX listed firms said.

“We need the YSX to clarify policy matters as soon as possible as this will expedite the procedures we need to take to enable trading with foreigners,” said Dr Thaung Han, executive director of Myanmar Citizens’ Bank (MCB), which is also listed on the YSX.

He added that YSX needs foreigners to trade on the local bourse to generate more liquidity which will enable the listed companies to raise more funds for growth.

According to the Myanmar Companies Law, foreigners will be allowed to own a maximum of 35 percent in a YSX-listed company. At that level, the company will remain a Myanmar citizen-owned company.

Calculation of the foreign investment ratio will be carried out in connection with the Myanmar Companies Online (MyCo) online registration system, said U Aung Naing Oo, director general of the Directorate of Investment and Company Administration (DICA).

Myco is the online company registration webpage started by DICA on August 1 for company registrations and amendments of company structures. The online system can also calculate foreign investments of a company.

“Under the MyCo online system, the process of determining ownership of assets will be more systematic. For example, if a company originally has a percentage of foreign ownership, it will not be able to invite full 35pc foreign investment. This should be public information,” said U Aung Naing Oo.

There are currently just five companies listed on the YSX. With foreigners soon able to trade though, that number is expected to rise. Another three companies are already planning to list over the next year.

Last month, the value of stocks traded on the YSX hit a 2018 high of K1.23 billion, with a total of 286,328 shares exchanging hands.

On August 9, just 13, 574 shares valued K53million were traded. At those levels, the YSX has a market capitalisation of K613,517 million.