Myanmar Opens Stock Market to Foreign Investors
- The Securities and Exchange Commission of Myanmar (SECM) has allowed resident and non-resident foreigners to participate in securities trading on the Yangon Stock Exchange (YSX).
- Currently, there are only five companies listed on the YSX, with a market capitalization value of US$400 million.
- Permitting foreign traders will allow the stock market to scale up and the increase in liquidity can help listed companies expand.
- Resident and non-resident foreigners will need to obtain a recommendation letter from a local securities company to start trading.
In March 2020, the Securities and Exchange Commission of Myanmar (SECM) issued Instruction 1/2020, allowing foreign participation in the daily share trading on the Yangon Stock Exchange (YSX).The YSX only has a market capitalization of US$400 million and so permitting foreign traders will help scale up the stock market and increase liquidity. In the long term, this will enable YSX-listed companies to access more capital and expand their operations.
To date, there are only five companies registered on the YSX. These are:
- First Private Bank Ltd (FPB);
- Myanmar Thilawa SEZ Holdings Public Co., Ltd (MTSH);
- TMH Telecom Public Co., Ltd (TMH;
- First Myanmar Investment Public Co., Ltd (FMI); and
- Ever Flow River Group (EFR).
Both resident and non-resident foreigners can apply to open a securities account. Under the foreign exchange management law, residents are defined as:
- Individuals who have their residence in Myanmar for at least 183 days during the calendar year; and
- Companies incorporated in Myanmar or branches of foreign companies registered in the country.
How can resident and non-resident foreigners open a securities account?
A local securities company will first receive an application from the resident foreigner, and their information will be sent to the YSX to see if they already own a securities account.
Once their credentials have been checked, the securities company will issue a ‘recommendation letter’ to the resident foreigner, recommending the opening of a Resident Kyat Account for Securities (R-KAS), or namely, a Myanmar kyat (MMK) current account.
For non-resident foreigners, the securities companies will recommend the opening of a Non-Resident Foreign Currency Account for Securities (N-FAS), also known as a foreign currency current account, in addition to a Non-Resident Kyat Account for Securities (N-KAS), also known as an MMK current account.
The securities company can only issue the recommendation letter to non-foreign residents after the securities company completes the ‘know your customer’ process.
The recommendation letter will include:
- Name and address of the applicant;
- Date of birth;
- Any official identification number/passport number issued by the applicant’s home country;
- Name of the local bank the applicant will open their account intended for securities trading; and
- Information regarding a Myanmar bank account (for resident foreigners) or an international bank account (for non-resident foreigners).
Investors should note that the securities account can only be used for securities trading and that the resident and non-resident applicant must provide written confirmation to the securities company stating the account will not be used for any other purpose.
International securities brokers
If the applicants are securities brokers from abroad, the securities company must ensure the following conditions are met before opening an account:
- The applicants are under regulations, which are at least equivalent to those set by the Securities Exchange Law in Myanmar;
- The applicant is under the supervision of the relevant authorities of their home country;
- A copy of the applicant’s brokerage license issued by the authorities of their home country, and in the English language; and
- Submit a copy of the brokerage license to the SECM.