Capital Markets in Myanmar

Myanmar Capital Markets | Yangon Stock Exchange 

The Yangon Stock Exchange (YSX) opened in December 2015.  The first listing on the YSX its first took place in March 2016.  

The YSX was established by the Central Bank of Myanmar (CBM) in cooperation with the Daiwa Institute of Research Ltd (Daiwa), the core information-generating arm of Daiwa Securities Group, and the Tokyo Stock Exchange Group (TSE).  The CBM and Daiwa entered into a cooperative relationship to develop a stock exchange as far back as 1996. However it was only in April 2012 that the initiative gained renewed momentum and CBM, Daiwa and the TSE entered into a formal memorandum of understanding pursuant to which Daiwa and the TSE agreed to provide advice on the design of securities exchange markets and exchange systems, support for human resources, and seminars on finance and capital markets development.

In 2013 the CBM also signed memoranda of understanding with The Stock Exchange of Thailand (STE) and the Korea Exchange (KE) aimed at promoting capital market business opportunities and facilitating training of personnel. 

The new YSX’s is not Myanmar’s first foray into capital markets. A small but active burse operated in Yangon (then Rangoon, former capital of Burma) up until the late 1920’s. Public trading in shares was permitted in post-independence Burma allowed until the military takeover and introduction of the central planning system in 1962. The initial 1996 initiative between the Myanmar authorities and Daiwa led to the formation of the Myanmar Securities Exchange Centre Co., and the public listing of two companies, Forest Products Joint Venture Corp and Myanmar Citizens Bank. An over-the-counter market continues to exist for the shares of these companies which are both jointly owned by the government and investors.  The military junta began issuing government treasury bonds in 1993. According to the CBM these treasury bonds have been partly underwritten by the Myanmar Economic Bank and the Myanmar Securities Exchange Centre Co. since 2010.

Myanmar Banking Reform

A modern banking sector is a pre-requisite in capital markets development. Myanmar has implemented important reforms and liberalisation in financial services sector since the new civilian government took up office in April 2011. The lifting and suspension of economic sanctions by the E.U. and U.S. respectively means the Myanmar government can now implement additional reforms to attract foreign participation in the banking system in Myanmar alongside Myanmar banks. The FIL allows foreign banks in Myanmar to own up to 80% of joint ventures with local institutions, according to the MIC 100% foreign ownership may be allowed branches within two years.

At present Myanmar continues to lag behind the rest of South East Asia in terms of its telecommunication and IT capacity. Sophisticated share trading and settlement systems will need to be in place prior to the launch of the YSE. It remains to be seen whether or not Myanmar will be able to make the required infrastructural advancement in time for proposed launch date of the YSE at the end of 2015.

It is expected that the launching of the YSE and the development of capital markets in Myanmar will lead to significant demand for banking and securities, accounting and legal professionals.

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