Pandemic Derails Myanmar’s Nascent Financial Market Expansion

(Bloomberg) -- A resurgence of the coronavirus outbreak in Myanmar that’s forced a lockdown of its largest city is delaying plans to establish a market for corporate bonds and an additional listing option for companies seeking to go public.

A planned trial of corporate bond trading, set initially for December, has been put off to the first half of next year, said Htay Chun, a commissioner at the Securities and Exchange Commission of Myanmar. Uncertainty spawned by the pandemic means only a handful of companies are in talks to join the Pre-Listing Board, an alternative to the main stock exchange with easy listing rules, he said.

The pandemic is the latest hurdle in Myanmar’s push to develop its fledgling capital market as investors remain wary of the grim outlook for economic growth and a stronger currency. While the regulator allowed foreigners to trade on the Yangon Stock Exchange in March, only 41 have put money into four stocks, Htay Chun said.

“We are now facing a lot of uncertainties due to the force majure in the form of Covid-19. It’s a big blow to our operations,” Htay Chun said in a phone interview Thursday. “If the virus spread cannot be contained in a few weeks, the launch of the second board may be postponed again to next year.”

Authorities have banned domestic travel and imposed a strict stay-at-home order in Yangon province, home to Myanmar’s commercial hub, after new cases and deaths began soaring from the end of August. The curbs have shuttered businesses barring essential services and, with the outbreak showing no signs of slowing, the lockdown may continue indefinitely,

Trading volume on the Yangon Stock Exchange, which has a total of six listed companies, has fallen during the second wave of virus, Htay Chun said. With two infrastructure development companies close to getting listed, investors may return once the pandemic is stamped out, he said.

Other highlights of the interview with Htay Chun are:

• Foreigners own 261 million kyat ($200,000) of stocks as of Oct. 8 with First Myanmar Investment Co. and Myanmar Thilawa SEZ Holdings making up bulk of the holdings
• Only two to three firms out of 210 registered public companies are in discussion to join the Pre-Listing Board
• Commission is in talks with the International Finance Corp. to facilitate corporate bond sales for qualified investors
• The regulator is also working to set up Myanmar’s first derivatives exchange within one year

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