Myanmar Etf: A Guide To Investing In The Country's Future

Myanmar is one of the hottest frontier investment markets today, with a young population of roughly 50 million people and a growing consumer market. However, it is not easy to invest in Myanmar as a foreigner, as there are no ETFs or mutual funds with direct exposure to the country's economy. There are only a few listed companies on the Yangon Stock Exchange, and they don't actively trade. As a result, investors interested in Myanmar may want to consider indirect plays, such as investing in neighbouring countries that stand to benefit from Myanmar's growth, like Thailand, or countries with close financial ties to Myanmar, like Singapore.

Investing in Myanmar's private equity market

Myanmar is one of the hottest "frontier" investment markets today. The country is undergoing a significant transformation, moving from an authoritarian regime to democracy, from conflict to relative peace, and from a closed economy of state-owned companies to an open, free market economy. These simultaneous positive changes are unprecedented, attracting the attention of fund managers eager to invest.

However, investing in Myanmar is not straightforward due to its nascent financial system. The Yangon Stock Exchange, the country's first stock exchange, was only recently established, and there are currently only two listed companies: Myanmar Citizens Bank and Forest Products Joint Venture Corp (FPJVC). These companies do not actively trade, and there are very few investable vehicles available.

This leaves the private equity market as the primary avenue for investment. Numerous funds are being established to capitalize on the wave of capital waiting to enter Myanmar's economy. These funds will seek local businesses and projects to invest in, creating lucrative opportunities for those who can source deals and identify strong investments on the ground.

Myanmar offers a young population of approximately 50 million people, simultaneously boasting one of the cheapest workforces in Asia and one of the fastest-growing consumer markets. The country has diverse needs across various sectors, including manufacturing, tourism, agriculture, construction, real estate development, transportation, and logistics.

However, Myanmar still faces significant infrastructure challenges. Basic services like electricity and banking are lacking, and access to technology is limited, with only 6% of the population having telephones. The country is working to address these issues, with improvements in power generation, telecommunications, and financial services on the horizon.

For investors, the key considerations are finding the right connections and opportunities within Myanmar and being prepared to navigate the challenges of a developing market. With the country's positive trajectory and the potential for substantial returns, investing in Myanmar's private equity market could be a rewarding venture.

Indirect investment through Thailand

As Myanmar is an emerging market, there are currently no ETFs dedicated to the country. However, one way to gain exposure to Myanmar's economy is through its neighbouring country, Thailand.

Thailand is Myanmar's largest export market and second-largest import market. As Myanmar moves towards a freer market, Thailand's import market is set to boom, and restrictions on imports are eased. Therefore, investing in Thailand will allow you to indirectly profit from Myanmar's growth while also directly benefiting from the business relationship between the two countries.

One way to invest in Thailand is through the MSCI Thailand Investable Market Index Fund (THD). This fund provides exposure to Thailand's market and allows you to benefit from the country's relationship with Myanmar.

Additionally, you can invest in the entire region, known as the Association of Southeast Asian Nations (ASEAN). ASEAN is a geopolitical and economic organisation of ten countries in Southeast Asia, including Myanmar and Thailand. The Global X FTSE ASEAN 40 ETF (ASEA) is a fund that invests in five original ASEAN members: Singapore, Thailand, Indonesia, the Philippines, and Malaysia. While this fund does not directly invest in Myanmar, it provides indirect exposure to the country's growth and the broader region's opportunities.

It is important to note that investing in frontier markets like Myanmar and the broader ASEAN region carries risks. These markets may be more volatile due to corporate governance issues and political risks. Therefore, investors should carefully consider these factors and take a long-term view when investing in these emerging markets.

Investing in Myanmar's public companies

Myanmar is a "'frontier' investment market that is transitioning from an authoritarian regime to a democracy, from a conflict situation to relative peace, and from a closed economy of state-owned companies to an open, free-market economy. As such, it presents a unique opportunity for investors. However, investing in Myanmar's public companies is not straightforward due to the limited number of listed companies and the lack of ETFs with direct exposure to the country's economy. Here are some ways to consider investing in Myanmar's public companies:

Yangon Stock Exchange

Myanmar's stock market, the Yangon Stock Exchange (YSX), was established in 2015 and is still in its early stages of development. As of 2016, there were only two listed companies on the YSX: Myanmar Citizens Bank and Forest Products Joint Venture Corp (FPJVC). However, these companies did not actively trade, and there were no institutional investors. The lack of activity on the YSX has made it challenging for foreign investors to gain direct exposure to Myanmar's economy.

Over-the-Counter Trading

First Myanmar Investment Co., Ltd., a company controlled by Myanmar's leading tycoon Serge Pun, trades "over the counter" among well-connected locals in Myanmar. However, it is not listed on the Yangon Stock Exchange, making it difficult for foreign investors to access.

Singapore-listed Companies

Yoma Strategic Holdings, another company controlled by Serge Pun, is a Singapore-listed conglomerate with interests in property development, banking, and other industries. Its sister company, First Myanmar Investment, was the first stock to trade on the Yangon Stock Exchange. While Yoma Strategic offers exposure to Myanmar's economy, its valuation has already surged, which may impact potential returns.

Indirect Investment through Thailand

Thailand is Myanmar's largest export market and second-largest import market. As Myanmar's economy opens up, the import restrictions are expected to ease, and the trade relationship between the two countries is expected to strengthen. Investing in the MSCI Thailand Investable Market Index Fund (THD) allows investors to indirectly profit from Myanmar's growth while directly benefiting from Thailand's business relationship with the country.

Regional Investment through ASEAN

The Association of Southeast Asian Nations (ASEAN) is a geo-political and economic organisation of ten countries, including Myanmar. The Global X FTSE ASEAN 40 ETF (ASEA) provides exposure to the ASEAN region, although it only invests in the five original members: Singapore, Thailand, Indonesia, the Philippines, and Malaysia. This fund offers indirect exposure to Myanmar's economy as the country benefits from the region's growth.

Private Equity Market

With limited listed companies in Myanmar, private equity funds are also an option for investing in the country. These funds will invest in local businesses and projects, particularly in sectors such as manufacturing, tourism, agriculture, construction, real estate, transportation, and logistics. However, due diligence is crucial when considering private equity investments, as Myanmar still lacks basic infrastructure, and investing in frontier markets carries higher risks.

Investing in the ASEAN region

The Association of Southeast Asian Nations (ASEAN) is an excellent place for expat entrepreneurs and investors. The region has a market of nearly 700 million people, which is 8% of the world's total population. The combined income per capita reached an average of US$5,391 as of 2022, with Singapore having the highest GDP per capita at over US$82,794, followed by Brunei at US$37,445.

ASEAN has contributed 60% of its current Gross Domestic Product (GDP) to domestic consumption, which is expected to increase to $4 trillion, making it the fourth-largest economy in the world. Five ASEAN countries—Indonesia, Malaysia, the Philippines, Thailand, and Singapore—are expected to experience the largest increases in future consumption, with growth rates of 4.5% and 4.6% in 2024 and 2025, respectively.

Singapore

Singapore is the de-facto financial hub of Southeast Asia and one of the most capitalistic societies in the world. It attracts investors and entrepreneurs with its stable banking system, low taxes, and immigration-friendly policies. However, immigration has become more challenging in recent years.

Indonesia

Indonesia is Southeast Asia's largest country and the world's fourth most populous, with over 240 million inhabitants. The country presents a vast amount of opportunities, but it is still underexploited by international investors due to its poor infrastructure and the challenge of transportation across its 18,000 islands.

Brunei

Brunei has a small population of around 400,000 people, but this oil-rich nation has a higher wealth per capita than even Singapore. The country has zero debt, and the government is working to diversify its economy away from the oil and gas industry for long-term sustainability. However, it is ruled by a Sultan who is transitioning the legal system to one based on Sharia law, which may have economic repercussions in the future.

The Philippines

The Philippines has a large pool of skilled, English-speaking workers, making it ideal for outsourcing and doing business without language barriers. It also has a sizable services sector for an emerging market. However, the country is infamous for its bureaucracy and corruption, which can be challenging for businesses.

Laos

Laos is landlocked and shares borders with five other countries, giving it many opportunities as a transportation hub. It is currently undergoing significant infrastructure development, with superhighways and rail lines under construction. However, it is still relatively undeveloped compared to other Asian countries.

Myanmar

Myanmar, also known as Burma, is Southeast Asia's final frontier. The country is transitioning from an authoritarian regime to democracy and has a population of over 60 million people who are optimistic about their newfound freedom. However, the extreme difficulty of doing business in Myanmar due to vague or non-existent foreign investment laws cannot be understated.

Vietnam

With rising costs in China, many companies have moved their manufacturing operations to Vietnam, taking advantage of its skilled workforce. However, inflation has been a historical problem in the country, and investors should carefully consider this risk.

Thailand

Thailand is the second-largest investor in the emerging economies of Laos and Myanmar, and its economy benefits from a diverse range of sectors, including car manufacturing, rice exports, and tourism. However, political tensions and coups have impacted the country's stability.

Cambodia

Cambodia is the poorest country in Southeast Asia, but it has consistently achieved economic growth of over 10% annually since Pol Pot left power, presenting potential investment opportunities.

Malaysia

Malaysia's multicultural society and the large population of Muslims, Chinese, and Indians attract investments from the Middle East, China, and India due to a sense of familiarity. Kuala Lumpur, its capital, is the world's largest Islamic finance center. However, policies favoring the ethnic Malay majority have created resentment among the Indian and Chinese minorities.

In summary, the ASEAN region offers a diverse range of investment opportunities, from established financial hubs like Singapore to emerging markets such as Myanmar. With a large and growing market, increasing consumption, and a shift towards a more open and integrated economy, ASEAN is an attractive destination for investors seeking to capitalize on the region's dynamic growth and development.

Investing in Myanmar's stock market

Myanmar is one of the hottest "frontier" investment markets today. The country is transitioning from an authoritarian regime to democracy, from a conflict situation to relative peace, and, most importantly, from a closed economy of state-owned companies to an open, free-market economy. These simultaneous positive changes are unprecedented.

However, investing in Myanmar's stock market is not straightforward. The Yangon Stock Exchange was only created recently, and there are very few companies listed on it. As of 2016, there were only two listed companies: Myanmar Citizens Bank and Forest Products Joint Venture Corp (FPJVC). These companies don't actively trade. There are also two public companies controlled by Myanmar's leading tycoon, Serge Pun: First Myanmar Investment and Yoma Strategic. First Myanmar Investment trades "over the counter" in Myanmar among well-connected locals, and Yoma Strategic is the group's Singapore-listed arm, which has already surged in valuation.

Due to the limited number of companies listed on the Yangon Stock Exchange, investors may want to consider investing in private equity funds, which are being set up to capitalize on the wave of money waiting to enter Myanmar's economy. These funds will need local businesses and projects to invest in, and this is where the real opportunity lies. Getting involved in sourcing deals for these "frontier investment funds" could be very lucrative.

Myanmar has a population of around 50 million people, one of the cheapest workforces in Asia, and one of the fastest-growing consumer markets. The country needs development in various sectors, including manufacturing, tourism, agriculture, construction, real estate, transportation, and logistics. However, Myanmar currently lacks basic infrastructure. For example, only 25% of the population has access to electricity, there is no functioning banking or financial system, and only 6% of the population has telephones.

Despite these challenges, Myanmar's profile on the international stage is improving, and the country is taking steps towards improving its infrastructure. Several independent power producers are preparing to bring electricity to the country, and the government will soon announce the winners of tenders for two new telecoms licenses. Credit cards are starting to be accepted, and the banking system is being modernized.

For investors who want exposure to Myanmar's economy but are unable to invest directly in the Yangon Stock Exchange, there are a few indirect options. One way is to invest in companies listed in Singapore that do significant business in Myanmar, such as Yoma Strategic Holdings and Interra Resources. Another approach is to invest in neighbouring countries that will benefit from Myanmar's growth, such as Thailand, through the MSCI Thailand Investable Market Index Fund (THD). A broader option is to invest in the entire region, known as the Association of Southeast Asian Nations (ASEAN), through the Global X FTSE ASEAN 40 ETF (ASEA).

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