Myanmar’s stunted stock exchange expects as many as four initial public offerings in the coming months, in part because the prospect of equity trading by foreigners has stirred interest in listings.
While the rules for firms to join the more than three-year-old Myanpix index are onerous, leaving the nation with just five stocks, the entry of foreign investors will build confidence, according to the Yangon Stock Exchange.
“We have some strict criteria for listing but three or four companies have shown progress,” Masaharu Harada, a member of the exchange’s board of directors, said in an interview in Yangon. They could IPO in the next 12 months, he said, declining to name them.
Allowing foreigners to buy stocks is one of the ways Myanmar hopes to bolster interest in the benchmark Myanpix equity index, which has climbed about 19% this year. The nation is also planning to set up a second board with looser rules.
Harada said a final round of test trading runs for non-Myanmar investors is due next month. Rules have already been relaxed to allow foreigners, but the final green light is still pending as technical and other issues are tackled.
Overseas investors will “definitely” be able to purchase stocks next year, Harada said in the interview on Thursday.
Total trading value on the Yangon Stock Exchange more than tripled to about $2 million in September from a year earlier, though that remains small in an international context.
Companies have to meet 17 criteria to be eligible for the existing bourse, such as being profitable for at least two years and having a minimum of 100 shareholders.
The World Bank expects Myanmar’s economic expansion to climb toward 7% by 2022. About a third of the population lives in poverty, adding pressure on de facto leader Aung San Suu Kyi to accelerate reforms.