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Update on the YSX

Two more companies, Myanmar Agribusiness Public Corporation (MAPCO) and Great Hor Kham, are expected to list on the Yangon Stock Exchange (YSX) before the year ends, according to Htay Chun, a member of Securities and Exchange Commission of Myanmar (SECM).

MAPCO and Great Hor Kham were among the six companies initially chosen for listing on the YSX. They are yet to come to the Exchange although the other four firms have already been listed on the stock market. MAPCO is a public corporation with a focus in agricultural investment and agrobased industries, and Great Hor Kham is a general contract construction company, engaging in activities that include design and construction of roads, bridges, elevated ways, expressways, buildings and industrial factories. Two or three new companies are expected to be listed on the YSX before this year end as diverse standardised examination processes are under way to accept them on the Exchange, said Htay Chun. The upcoming firms, which are scheduled to enter the bourse with the IPO (Initial Public Offering) process, have undertaken required activities including the preparation of company prospectus in coordination with securities companies.

Sluggish Activity

Trading value on the YSX, which has seen a relatively sluggish activity in most of the months following its commencement, amounted to more than 70.7 billion Kyats in 2016. In 2017, the value reached more than 2.8 billion Kyats in January, over 3.1 billion Kyats in February, 3.4 billion Kyats in March, 1.2 billion Kyats in April and nearly 1.48 billion Kyats in May.

The aggregate trading value of April and May this year totalled at a mere 2.7 billion Kyats to be compared to the sum of 9.3 billion Kyats resulted in three months of January, February and March. The first week transaction in June 2017 saw a total of 46,000 shares traded for a mere 300 million Kyats. During the week, the stock exchange index downed to the lowest.

Although the YSX has encountered a steady decline of stock prices in subsequent months since its launch, some Myanmar officials hold a positive view on the Exchange. One of them is Maung Maung Win, Deputy Minister for Planning and Finance and Chair of the Securities and Exchange Commission of Myanmar, who previously said that market capitalisation and trading value figures at the YSX were higher than in Vietnam and Laos in just the first year of trading.

Firms on the Exchange

Four companies currently trading on the YSX are two business conglomerates and two banks – First Myanmar Investment (FMI), Myanmar Thilawa SEZ Holding (MTSH), Myanmar Citizens Bank (MCB) and First Private Bank (FPB). The Exchange was officially launched on December 9, 2015 and started trading on March 25, 2016. At present, foreigners are barred from trading on the bourse. FMI, one of the earliest business conglomerates in Myanmar, became the first listed company on the YSX on March 25, 2016. The firm has registered a total of 23,480,013 shares on the bourse, listing the stocks already offered in the OTC (Over-theCounter) market and does not issue new shares. FMI mainly ventures in financial services, real estate and healthcare sectors.

MTSH, which entered the bourse on May 20, 2016 to become the second listed firm, has registered 38,929,150 shares. MTSH was established in May 2013 by a Myanmar consortium comprising nine principal shareholders with a primary (but not exclusive) purpose of participating in the Thilawa Special Economic Zone (Thilawa SEZ) project to invest in businesses engaged in real estate development in Myanmar.

MCB, an early private bank in Myanmar founded in 1991, entered the Exchange on August 26, 2016, registering 10,400,986 shares. It is a joint venture between the Ministry of Commerce and the conglomerate Capital Diamond Group.

FPB, which holds the oldest banking licence in Myanmar, was the fourth to list on the YSX on 20 January 2017 and has registered 2,472,053 shares.

Tax Exemption Benefit

Meanwhile, listed companies on the YSX are expecting to enjoy tax exemptions and other income-related privileges in the near future in accordance with the provisions of the 2017 Union Tax Law. The law, enacted on March 1, incorporates a specific clause to give support to the development of the stock market in Myanmar. The clause comes with a subtitle that reads ‘income tax issues related to the YSX-listed public firms’, stating provisions intended for the progressive future of the bourse.

Government support is crucial to the success of a stock exchange market, said Yin Zaw Myo, Managing Director at the YSX. According to the Union Tax Law provision, the YSX-listed companies are expected to be granted tax exemption soon, he said.