Myanmar Reforms Help Yoma Achieve Record Highs in Stock Market

The visit of US President Barack Obama in Myanmar should help the overall economy of this small Asian country, neighbor to one of the biggest Asian powerhouses – China. The country’s shift to democracy was praised by President Obama and he has urged the Government to take more steps to increase freedom of the commoners in the country. Obama, initially, is the first ever US President to visit this country which used to be ruled by military. Hillary Clinton, the US Foreign Secretary is accompanying Obama in his tour to Myanmar.

The visit is being touted as landmark by many and according to some of the biggest companies in the country; the real estate market will really reap the benefits of this tour. Yoma Strategic Holdings Ltd., incidentally stated that their real estate business is expected to flourish further as after Obama’s visit; foreign investors may show more interest in Myanmar.

Myanmar incidentally is the richest in natural gas in the Southeast Asia region and investors from the developed European countries and US may feel that it’s the right time to jump in and start investing in this small country. Certain analysts believe that Obama’s visit is a historical moment for Myanmar and this will help investors who are sitting on the fence to take a decision. Myanmar incidentally has been ruled by Military rulers for more than 5 decades.

Yoma, a Singapore based company makes most of its profits from different projects in Myanmar and has decided to invest $81.3 million in a land project in Yangon. Yangon is the former capital of the country and also the commercial center. The total budget of this project is estimated at $350 million and this will have commercial, residential, hotel and retail space in a land above 10 acres. This project is expected to finish within the next 4-5 years.

Yoma incidentally has seen stupendous growth this year. Its share prices quadrupled in 2012 and this has already achieved the status of the 2nd best performing stock even in the FTSE Strait Times All Share Index. Despite being based in Singapore, the company’s most of the profits come from Myanmar.

Following the victory in 2010 election, the President of Myanmar, Thein Sein started discussions with the opposition leaders and took some positive steps to restore democracy in the country. One of those steps includes freeing the Noble Peace Prize winner Aung Suu Ki. Since then, US has also started relaxing sanctions on this Asian country.

Many real estate companies across the world believe that Myanmar is one of untapped countries in Asia and the market is emerging as well. As the estimated returns from an emerging market are around 20%-25%, many of these companies are showing interest in investing in Myanmar. Yoma officials stated that they are already negotiating with some upmarket hotel operators for investing into their ambitious “Star City” project. Incidentally, this small country with around 64 million people used to be a rich country till the 60s and many companies who are showing interest in investing into Myanmar are actually thinking of returning to the country after 30-35 years.

According to International Monetary Fund, the direct foreign investment in Myanmar will rise by 40% in 2012 and it will be at $3.99 billion. The economy is expected to expand by 6.2% this year, more than that of Indonesia, Philippines or Vietnam. Vishnu Varathan, an economist, based in Singapore, stated that Myanmar is undoubtedly an untapped frontier market in Asia. The Government is willing to support the investors as well. However, with an emerging market, there are risk premiums and warning labels. The investors must be ready to face those issues.