Stock market to arrive on time, like a Tokyo bus

The Yangon stock exchange will benefit from extensive Japanese support to meet a targeted October 2015 launch, said Daiwa Securities director Shinsuke Goto.

Although the Securities and Exchange Law was passed in 2013, Myanmar has not yet set up a Securities and Exchange Commission necessary for licensing the exchange and securities companies, and has not released rules to govern the exchange.

Some have expressed skepticism that Myanmar can meet the 2015 target to open the Yangon stock exchange, but Mr Goto said progress is being made in many areas, with a draft of the rules and the IT systems expected for completion during the third quarter.

Mr Goto pointed to Japan’s extensive support as a reason for optimism, while speaking at a Yangon KPMG forum on the stock exchange on June 19.

“Have you ever been to Japan?” said Mr Goto. “If you have experience visiting Japan, you must be surprised by the Japanese transportation system. Every train and every bus comes on time.”

The Japanese government, as well as Daiwa Securities Group, a large Japanese brokerage, and the Tokyo Stock Exchange Group are all fully involved in the Yangon stock exchange program, he said.

“This [stock exchange] is a project initiated by Japan… And once we set the target we will make every effort to meet the deadline. This is the character of the Japanese. So you don’t need to mind, the stock exchange will open.”
Myanmar has an existing exchange on the second floor of the Myanmar Economic Bank on Sule Pagoda Road in Yangon, but trading is rare and facilities outdated.

Two companies, Myanmar Agribusiness Public Company (MAPCO) and Asia Green Development Bank (AGD), have declared intentions to eventually list on the new Yangon stock exchange, and several others have publicly mulled following suit.

Capital Diamond Star Group chief financial officer Lim Chong Chong said the group is considering whether to list, among other options for its financing, adding it welcomes developments that lower the cost of financing,
Borrowing from Myanmar banks often has an all-in cost of 16 percent, while companies outside Myanmar can get financing for as little as 3pc, he said.

“Having access to more, cheaper funding is going to helps ourselves and the people of Myanmar generally, because lowering the cost of funding means we can lower the cost of products,” he said at the forum.
Mr Goto also released a tentative set of listing requirements, adding they were “very easy” for many Myanmar companies to meet.
Firms will need to have more than 100 shareholders with K500 million in capital (US$511,250). There will also be a requirement that firms have a certain-sized stake owned by minority shareholders, as well as having turned a profit in the previous two years or a market capitalisation of more than $10 million.
Although the tentative listing requirements are easy to meet, it will be important that quality firms list, said Tanate Kasemsarn, a Thailand KPMG partner.

“The criteria, compared to other exchanges, is very flexible,” he said. “A key issue is how to get the good companies to be the listed companies.”

Officials have set a goal of four or five listed firms at the exchange’s launch, with some noting the Ho Chi Minh City Stock Exchange had four listed companies when it launched in 2000. Myanmar and Brunei are the last two ASEAN countries without stock markets.

Source: Myanmar BUSINESS TODAY

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