Myanmar plans to set up a second board next year that foreigners can trade on to bolster its moribund stock market.
Listing rules for the alternative venue will be less strict than on the Yangon Stock Exchange’s main market, the Securities and Exchange Commission of Myanmar said. The three-year-old main index has only five stocks and little trading, stoking skepticism about the nation’s ability to foster a vibrant equity culture.
“Our main target isn’t to compete with, but to complement, the Yangon Stock Exchange,” Htay Chun, a commissioner at the securities agency, said in an interview Wednesday in Yangon.
Officials view deeper capital markets as key for faster economic growth. But efforts to attract investors have been hurt by a number of factors, ranging from regulatory hurdles to condemnation of Myanmar for the Rohingya humanitarian crisis.
The new board could be up and running by the third quarter of 2020, Htay Chun said. The goal is to have more than 10 companies on it and to allow foreigners to trade from day one, he said.
“The Yangon Stock Exchange’s listing criteria are so strict that many companies don’t meet the minimum standards,” Htay Chun said. More than 250 firms are potential candidates for the alternative market, which could be a stepping stone to listing on the main index, he said.
Foreigners may be allowed to trade on the main exchange in the first half of next year, potentially beginning with expatriate permanent residents, he said.
The move could boost total trading value on the Yangon Stock Exchange’s existing Myanpix index, which slumped 81% to 14 billion kyat ($9 million) last year compared with 2016.
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. Htay Chun didn’t specify the criteria for the new stock market.
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.