Despite latest IPO, Myanmar’s stock exchange remains lame duck

The young Yangon Stock Exchange saw its first real initial public offering (IPO) on January 26, but despite high expectation of the listing of TMH Telecom, overall trading remained lackluster since.

Trading volumes were initially boosted by investor interest in the telecom, which is now the fifth company listed on the stock exchange in Yangon. The stock reached a high of 3,250 kyat ($2.44) on its first day, but closed at 3,100 ($2.33) kyat – unchanged – on January 31 at just a quarter of the trading volume of the first day.

TMH Telecom was actually the first company on the Yangon exchange to offer new shares on the stock exchange under an IPO. It managed to raise 1.6 billion kyat ($1.2 million) in proceeds, significantly below the expected two billion kyat. Of the money, 70 per cent of which will be used to cover equipment and labour costs associated with its 126 telecommunications towers in the Mandalay and Shan regions.

While trading in the stock is far from overwhelming, analysts see it as possible precedent for other companies to consider an IPO as a channel to raise funds. Authorities have said that this year they will be working to raise liquidity and depth in Myanmar’s capital markets. 

After Myanmar’s military-backed government transferred power to a civilian administration in 2011, the country embarked on a series of economic reforms headlined by the creation of the Yangon Stock Exchange. But the exchange struggled since its launch of trading in March 2016 to find participating companies and investors.

The Myanmar Stock Price Index, based on the weighted average of market capitalization for the components, has been on a soft descent ever since. At its peak shortly after the opening of 1,322, the index is down to 457.05 as of today.

Adding to that, the four companies already on the bourse – First Myanmar Investment Co., Myanmar Thilawa SEZ Holdings, Myanmar Citizens Bank and First Private Bank – have floated only existing shares, generating no new capital.

The raising of fresh capital by TMH will serve as a test case for exchange regulators, as well as for brokerages and listed companies, analysts believe. The Myanmar government in November last year also enacted the new Myanmar Companies Act, which allows foreign capital to invest up to 35 per cent in domestic businesses. Authorities also are expected soon to let foreigners participate in domestic stock trading under certain conditions.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid

The young Yangon Stock Exchange saw its first real initial public offering (IPO) on January 26, but despite high expectation of the listing of TMH Telecom, overall trading remained lackluster since.

The young Yangon Stock Exchange saw its first real initial public offering (IPO) on January 26, but despite high expectation of the listing of TMH Telecom, overall trading remained lackluster since.

Trading volumes were initially boosted by investor interest in the telecom, which is now the fifth company listed on the stock exchange in Yangon. The stock reached a high of 3,250 kyat ($2.44) on its first day, but closed at 3,100 ($2.33) kyat – unchanged – on January 31 at just a quarter of the trading volume of the first day.

TMH Telecom was actually the first company on the Yangon exchange to offer new shares on the stock exchange under an IPO. It managed to raise 1.6 billion kyat ($1.2 million) in proceeds, significantly below the expected two billion kyat. Of the money, 70 per cent of which will be used to cover equipment and labour costs associated with its 126 telecommunications towers in the Mandalay and Shan regions.

While trading in the stock is far from overwhelming, analysts see it as possible precedent for other companies to consider an IPO as a channel to raise funds. Authorities have said that this year they will be working to raise liquidity and depth in Myanmar’s capital markets. 

After Myanmar’s military-backed government transferred power to a civilian administration in 2011, the country embarked on a series of economic reforms headlined by the creation of the Yangon Stock Exchange. But the exchange struggled since its launch of trading in March 2016 to find participating companies and investors.

The Myanmar Stock Price Index, based on the weighted average of market capitalization for the components, has been on a soft descent ever since. At its peak shortly after the opening of 1,322, the index is down to 457.05 as of today.

Adding to that, the four companies already on the bourse – First Myanmar Investment Co., Myanmar Thilawa SEZ Holdings, Myanmar Citizens Bank and First Private Bank – have floated only existing shares, generating no new capital.

The raising of fresh capital by TMH will serve as a test case for exchange regulators, as well as for brokerages and listed companies, analysts believe. The Myanmar government in November last year also enacted the new Myanmar Companies Act, which allows foreign capital to invest up to 35 per cent in domestic businesses. Authorities also are expected soon to let foreigners participate in domestic stock trading under certain conditions.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid