TODAY

The following are comment expressed by Professor Dr Aung Tun Thet on the Yangon Stock Exchange an interview with TODAY.

When the Yangon Stock Exchange was launched in Yangon on 3 March this year people bought the FMI stocks with great expectations. They said it was a really amazing success. That’s vitally important, but it’s  just beginning, like the first few steps of toddler.

Now FMI, having got listed on the Stock Exchange, is assured of people’s trust and confidence, and other companies are trying to follow suit: companies such as MAPC (Myanmar Agribusiness Public Company) and Myanmar Thilawa SEZ. As the number of such companies grows so will the country’s economy. This business of selling and buying stocks could even develop into a viable capital market for companies.

Stock exchanges such as NYC, SG, Fraukfurt, London and BKK have many listed companies. In Cambodia they started the SE business with a single company as we do here in Myanmar. And this we should encourage anyhow. The stock exchange and the listed companies should work in a systematic way. What I’m very much afraid we might see happen in Myanmar is people following the path of multilevel marketing with its underhand business deals. That could do us a lot of harm, so we should be careful about it.

In about 50 years’ time. I think, we can have a stock exchange facility in Mandalay and Mawlamyine. This business of stock exchange has great prospect. What matters is to start on a right track, For this, we need patience. Now we’re doing it with the help of Japan, but we ourselves should play an active role.

Stock exchange is only part of financial institution. For it to function well, stock exchange needs stockbrokers, and this service is provided by securities companies. We already have securities companies in Myanmar.

Stock exchange is, basically, about public listed companies. Just being a public company is not enough. In Myanmar we have more than two hundred companies registered as public companies, but not all of them can expect to get listed on the stock exchange. The Yangon stock exchange has a set of listing criteria. If you wish to get listed on such exchanges as New York Stock Exchange and Singapore Stocks Exchange, you have to go through a screening process. The Yangon Stock Exchange also has a set of 17 criteria applicant companies are required to meet. Meeting these requirements is a convincing enough evidence of a listed company’s credibility. All this depends on the corporate governance.

A listed public company has two distinct parts: ownership and management. Shareholders are owner and managers are employees with managerial skills.

Shareholders have trust in the systematic formation of Board of Directors and efficient leadership of CEOs. The responsibility of the stock exchange is to make sure that companies listed are credible. In the US dishonest companies are delisted.

A stock exchange is regulatory body. In its broader sense a stock exchange is a capital market, a place where companies put their stocks on sale to increase their capital. In former days there were few opportunities for business expansion, their assets being limited.

For healthy stock exchange environment political openness is necessary. Lack of transparency would make it difficult to do business. So we’ve got to change our entire culture into a culture of openness and transparency. Another essential factor is the rule of law. It has to do with what we should do to lessen the impact on the shareholders in the event of the company going bankrupt. This is something we should put our heads together over. All that depends on the Securities Exchange Commission, SEC, overseeing the public companies.

Beware! That’s what I’d like to say if you’re going to buy stocks. You should not blindly trust whatever the seller says. You have to try not to get deceived. Tricksters are around as always, but you have SEC to help you in this regard. Companies do what’s call IPO, Initial Public Offering. If that works out right, their share value goes up.

In due course we’ll have more players in this stock market. Recently we saw some super-rich investors in China going bankrupt as a result of their share prices plunging.

We also see some companies getting rich through speculation. At time of their IPO Apple and Microsoft attracted only a small number of buyers because they were start-ups in the new technology. But some bought their shares seeing the prospects and the value of their shares grew with the eventual growth of these companies.

There’s something wrong about the way some people by stocks. Most of them have their eye only on dividend. In fact share price is potentially more valuable. They should know that they can get richer as the share prices go up.

All that I’ve said so far are about individual buyers. It’s more important for institutional shareholders like securities companies. These companies bought shares of companies young people got more for their capital not get as such as they would if they had not sold the shares. These are frequent occurrences that should serve as warning to the would-be share buyers.