Myanmar investors flock to stock market after decades-long wait

 

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Myanmar investors from students to seafarers have flocked for a frenetic first plunge into the stock market since the military grabbed power more than 50 years ago and launched its Burmese Way to Socialism.

The Yangon Stock Exchange boasts only one company and a capitalisation of only 751bn kyat ($630m), as it prepares to pause for a new year holiday break next week. But the much larger than expected swell of investors during a volatile first fortnight's trading shows the pent-up demand for new ways to profit as the country opens up.

Officials claim they can avoid the fate of near-moribund markets in neighbouring Cambodia and Laos, drawing parallels instead with Vietnam; a market that has had a few wobbles of its own.

“Myanmar people are searching for new forms of investment,” said Kensuke Yazu, an adviser to the Myanmar-Japanese joint venture."One happy thing is that this country has 50m people and huge internal consumption."

The market’s arrival after an aborted launch in the 1990s mirrors the country’s long haul from dictatorship to the civilian-dominated government that took power last week. State-owned Myanmar Economic Bank, the exchange’s majority owner, is still under military junta-era US sanctions although the restrictions were eased in 2013.

Dozens of small investors gathered this week to watch the electronic price board at the exchange, based in a historic Yangon building that had been occupied by an outpost of India’s central bank during British colonial days, and where the internet connection remains patchy today. Nyan Lin Htet, a 19 year-old student, said he had already cashed out a profit of more than $650 after shares he bought on the first day rose more than 25 per cent in a week.
“I researched on the internet about the US stock exchanges, about Nasdaq and Dow Jones,” he said. “So I think in Myanmar the Yangon stock exchange will be successful like this.”
His brother, Ye Min Aung, a 24 year-old merchant seaman, was buying his second tranche of shares after netting almost $250 on his first dip. He highlighted how the exchange offered an alternative to other investment classes that have either flattened out or priced out all but the super-rich since the military junta stepped down in 2011.
“Myanmar people like to invest in real estate and cars,” he said. “Now the latest business style is stocks and shares.”
YSE officials eagerly brandished a table showing how early trading had beaten forecasts by a factor of more than 10 and outperformed the debuts of both the Laos and Cambodia bourses, although both those countries have much smaller populations.
Choice is also limited in Yangon. First Myanmar Investment, a hospitals-to-aviation conglomerate, is the only company quoted so far, with shares costing more than $25 apiece at the opening. The exchange is targeting at least five listings by year-end and wants eventually to open the market to foreign investors.
FMI delighted early buyers by climbing from its opening 31,000 kyat a share to 41,000 within three days, but had dipped to 32,000 kyat by Friday’s close.
While many investors are wealthier and better travelled than most in what remains one of the region’s poorest countries, some are investing significant portions of savings that might previously have been sunk into gold.
Rudi Rolles, managing director of KBZ Stirling Coleman Securities, a stockbroker whose riverside office drew queues snaking from the door during the first days of trading, said his business encouraged customers to place price limits on orders to restrict potential losses. “We have to educate investors a lot,” he said.
In the brokerage’s busy reception area, new investors included Khin Maung Cho, a 58-year-old retired pharmaceuticals merchant looking for better returns on $4,000 of savings than he would get from bank interest. He was confident his trading background would give him an edge, while his life experience made him relaxed about any possible reverses.
“I used to do meditation, so I know nothing is everlasting,” he said. “Everything is uncertain, so I am not worried.”

Financial Times