FEER: Stock Market In The Works

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(FEER)/Shroff/Burma: Vibrant Stock Market In The Works
 
     By Michael Vatikiotis 
 
   RANGOON (AP-Dow Jones)--Any flicker of life in the 
Burmese economy ignites investors' hopes that the region's 
most reluctant emerging market is finally about to emerge. 
So when Japan's Daiwa Institute of Research signed a 
joint-venture agreement on April 5 with the state-owned Myanmar 
Economic Bank to set up a stock market, investors were giddy. 
   Rangoon-watchers say this is evidence that Burma is moving 
ahead of other emerging markets like Vietnam and Cambodia in 
developing a capital market, the Far Eastern Economic Review 
reports in its Shroff column in its edition published Thursday. 
'It would not be a surprise to see something happen in Burma more 
quickly,' says Eugene Davis, chairman of Bangkok-based merchant 
bank Finansa Thai. 
   Indeed, foreign investors often give Burma the edge over 
Vietnam and Cambodia. The country's commercial laws are said to 
be better, English is widely spoken, and regional businessmen see 
the government as stable - despite its human-rights record. 
   Now, according to Hisao Katsuta, chief representative of the 
Daiwa Institute of Research in Bangkok, a vibrant stock market is 
in the making. 
   Katsuta expects an over-the-counter market to be operating by 
June and says the government wants a fully fledged stock market 
operating within five years. 
   Daiwa has 50% of the equity in the Myanmar Securities Exchange 
Centre Co. The company has paid-up capital of 20 million kyats. 
   Burma's Finance Minister Brigadier Win Tin was quoted in the 
local media as saying that Daiwa would provide 'technical assistance' 
to help set up a stock exchange. According to Katsuta, the new company 
is empowered to act as an over-the-counter market, and to underwrite 
and broker equities and securities. 
   A stock market just like that? Katsuta is sanguine. He points 
out that shares in two or three private companies are already traded 
privately, a securities-exchange law is close to enactment, and he 
believes that the military-led government is 'serious' about 
privatization. 
   However, one market-maker doesn't a market make. Some observers 
in Rangoon question whether conditions for launching a stock market 
really exist. For one, the accounting standards on which a fair and 
equitable market should be built are non-existent. 'The integrity of 
all capital markets depends on the integrity of financial reporting. 
There is no move towards this here,' says a foreign executive in Rangoon. 
   Besides, finding companies to float could be a problem. Optimists 
point to First Myanmar Investment (FMI), which owns the private Yoma 
Bank and was the first group to begin trading shares privately. 
   According to Katsuta, FMI shares are currently trading at 13,000 
kyats, over a par value of 10,000 kyats. But FMI is an isolated case. 
   Experienced emerging-market watchers remember how Jakarta's moribund 
bourse was reignited in the late 1980s with the whiff of an overvalued 
scrip from a single hotel company. But that was set against a backdrop 
of real economic reform. Burma's year-old privatization program has 
yielded little more than a few upcountry movie-houses. Stay tuned. 
   (END) AP-DOW JONES NEWS 17-04-96
   0246GMT