The Yangon Stock Exchange (YSX) opens its doors for the first day of trading

25 มีนาคม 2559

The Yangon Stock Exchange is scheduled to come to life at 9:30 this morning when First Myanmar Investment shares become free to trade electronically, following a pre-launch lockdown during which even the FMI public relations team was turned away

The country’s first modern bourse – which opened in December, though not for trade – was closed to the public yesterday as officials prepared to allow FMI’s 23,480,013 shares to launch.

“There are so many things [to do],” U Min Thu, a senior manager at the YSX’s market department told The Myanmar Times yesterday, adding that the team was excited for the opening day of trading.

After a morning ceremony members of the public will be free to visit the exchange, he said. Visitors hoping to soak up the excitement yesterday were left disappointed, finding the doors firmly shut.

The new bourse will also include a coffee shop, though when The Myanmar Times visited yesterday U Min Thu said it had yet to find a vendor.

“We have the space [reserved] for a coffee shop,” he said. “But we haven’t been able to find someone [to run it].”

Yesterday’s preparations included announcing the base price for FMI’s first public listing, which will be K26,000 per share. Taking into account the number of shares, this puts the total value of FMI at around K610 trillion – just over US$500m.

The K26,000 base price is considerably less than the last asking price FMI reported when it was still trading shares over-the-counter at its own FMI Trading Centre. The last asking price listed at the trading centre was K35,000 on January 22.

U MaungMaungThein, chair of the Myanmar Securities and Exchange Commission (SECM), and U Zaw Lin Aung, director of KBZ Stirling Coleman, one of the firms advising FMI on its listing, both said that the K26,000 figure was based on “historical” trading values.

This involved looking the value of the shares – as traded at the FMI centre – before and after FMI’s public listing was announced and where the shares are currently valued.

The mid-price – between the bid and offer price – of FMI’s shares jumped from K18,503 in December 2015, when the government announced that the company would list, to K28,838 in January this year according to FMI.

Typically when a company makes an initial public offering (IPO) it files a price range in its prospectus or disclosure document. If demand is high it prices at the top of this range. But usually IPOs involve a company selling new shares, whereas FMI is transferring existing shares onto the exchange.

One Hong Kong based equity investment banker said FMI’s transfer of shares onto the exchange is a listing, not an IPO, although U ThuraKoKo, managing director at Yangon-based advisory firm YGA Capital, said legitimate IPOs could involve only secondary shares.

Either way, FMI’s action of transferring all its outstanding shares onto a stock exchange without restructuring them or issuing new shares is relatively rare in Asian capital markets, said an equity investment banker at CIMB Bank in Hong Kong. As shares sold on over-the-counter markets rarely trade, the price may not give a proper representation of the company’s value, he said.

“It would be best to put [such shares] through a valuation process.”

Valuing companies in any market is a challenge, but one that Myanmar’s future investors seem happy to take up. Many people are eager to set up trading accounts and were peppering securities companies with requests even on the March 23 public holiday, said U MaungMaungThein.

“Education is more important than trading,” he said. “The main thing is that investors enquire about the companies’ background performance.”

Next in line to list is Myanmar Thilawa SEZ Holdings Limited, which U MaungMaungThein expects to debut before the Myanmar New Year holiday, which will start on April 9.

The SECM has certified five separate training courses, which can cost up to K40,000, that aim to inform the public about trading stocks and shares.

In order to prevent extreme volatility on the exchange, YSX regulation will prevent the price of any stock from moving more than set amount within a day’s trading. Shares with a value between K20,000 and K40,000 – like FMI – can only move K5000 up or down in a single day.

U MaungMaungThein said in today’s trading the share price would not be able to move more than 5pc in either direction and that it would not take more than 30 minutes for a seller to be matched with a potential buyer – assuming both parties are happy with the price.

Matching will be slower in the coming weeks, however. U Min Thu said that typically the stock exchange will open at 9:30am with one set of matching at 11am and another at 1pm. Whether the matching time is reduced in the future depends on the market, he said.

“Our exchange is just starting out,” he added.

Reference: http://www.mmtimes.com/index.php/business/19653-ysx-opens-doors-for-first-day-of-trading.html