“Future of Stock Trading & Wealth Management for Experienced and Young Professionals in Myanmar”

“Future of Stock Trading & Wealth Management for Experienced and Young Professionals in Myanmar” By Amos Rao, General Manager of Shenton Institute of Applied Finance, on 17th September 2016, 2.45 PM held at 24-26 Sule Pagoda Road, Kyauktada Township, Yangon, Myanmar

Distinguished Guests,

Ladies & Gentlemen,

Preamble

1) A very good afternoon to all of you. It is a very great honor to be here at Yangon Stock Exchange, to speak on the “future of stock trading & wealth management for experienced and young professionals in Myanmar”.

2) Myanmar’s equity-market journey began in the early 1990s, when executives from Daiwa Institute of Research Holdings, a unit of Japan’s second-largest brokerage, met with the nation’s military government in Yangon. Their initial target was to start a stock exchange by 2000. However the region’s financial crisis soon derailed those ambitions and it wasn’t until 2011, after the quasi-civilian government began opening up Myanmar’s economy, that the exchange plan was revived. [1]

3) As Myanmar emerges from economic isolation, it will need $80 billion of power, transport, and technology projects through 2030 to modernize its economy [1]. According to the Asian Development Bank. Buoyed by a flood of foreign direct investment, the ADB estimates the economy expanded about 8.3 percent last year and will grow nearly the same pace in 2016. [2]

4) As of 1st January 2016, Myanmar has an estimated population of 54 million [3], an abundant low cost labor force and is of strategic interest to China. In January 2015, a new 2,400km oil pipeline between the sea port of Kyaukpyu and Kunming in China was opened. A parallel railway line is now being discussed. Hence, Chinese investments will continue to flow in. [4]

Implications For Stock Trading in Myanmar

5) Mark Mobius, Executive Chairman at Templeton Emerging Market Group, an professional wealth manager has the following to say:

“On our radar screen are frontier or pre-frontier markets with high GDP growth rates, favorable demographics, cheap labor, low debt levels and only limited integration with global markets. Investing into a frontier market will provide good portfolio diversification. Risks that deserve special attention are fiscal, monetary and balance-of-payment imbalances, insufficient regulatory frameworks, unstable politics and differing currency regimes.” [5]

6) Unstable politics aside, Myanmar seemingly fit the above bill and is starting from a relative low base. The investment rationale and Myanmar’s potential lie in the shift from its agriculture-based economy to a manufacturing and services based model. Such a shift boosts productivity, income levels and eventually GDP growth numbers. Once the broader investment community discovers the potential of its economy, Myanmar’s equity market will see a rapid re-rating. [5]

Future of Wealth Creation & Management

7) The pace at which Myanmar �is growing and the increase in investments have been amazingly swift. It is quite evident that Myanmar is eager to catch up with its neighbors and become the Southeast Asian economic giant�it once was in the 1960s. The ADB estimates that at this rate, the country could triple per capita income by 2030 provided it surpasses challenges such as demonstrating sustainable development, increasing labor productivity, and continuing with its reform efforts. [6]

8) Foreign investments will be a large contributor to future growth rates. The McKinsey Global Institute estimated that in 2010, the size of Myanmar’s economy was approximately United States Dollar (USD) 45 billion. It predicts that the economy will double in ten years and more than quadruple by 2030 to over USD200 billion. There are not many countries left in the world that hold an investment potential of this size. [7]

9) In September 2014, Wealth-X, a consultancy that specializes in tracking the Myanmar rich, contributed insights and commentaries to Wall Street Journal, observed that there were about 40 individuals who are considered ultra-high- net worth in Myanmar, with a net worth of over $30 million. But it also stated that this number could grow by more than seven times in the next decade, the fastest such pace of growth anywhere in the world. [8]

With Great Power, Comes Great Responsibility

10) In that same WSJ article (dated 4th September 2014) titled “Meet the New Rich… In Myanmar”. One of the interviewees claimed that the People in Myanmar “have not yet developed taste as consumers,” That interviewee said that “It’s like starting from scratch. Some markets are set in their preferences… but here we can curate our offerings and bring designers that are interesting to fashion editors in London, New York and Paris rather than what is commercially available.” [9]

11) When applied to wealth management, it is pretty much the same. This is because professional wealth management is a fairly new concept in Myanmar. This means wealth management solutions could be curated by wealth management institutions and professionals. Strategically, such solutions, should not just be targeted at the super rich, but have to be customized to the emerging needs of the new middle class.

12) In contemporary pop culture, the quote “With Great Power, Comes Great Responsibility” can be attributed to a heartfelt scene from the 2002 superhero film Spider-Man wherein Uncle Ben Parker said the line to Peter Parker shortly before getting killed by a carjacker. [10] In this light, Peter Parker(s) are everywhere in Myanmar, represented by wealth managers, experienced and young professionals across industries and social classes.

Stock Trading As Means Of Wealth Creation

13) In this context, stock trading can be viewed as a means to wealth creation, which can be acquired by owning assets that not only appreciate in value but also generate a dependable income stream. These could be both physical and financial assets. However the most important asset in the wealth creation process, is the business asset. So by buying shares in the companies that trade on the Stock Market, one would be acquiring ownership in business assets that will grow monies and also an income independent of physical & mental labor, eventually creating wealth. [11]

14) With such created wealth, the role of wealth managers become strategic. Nonetheless wealth manager must continually adapt to evolutions in client preferences and they must also differentiate themselves from new market entrants and go forth and back the “supply chain of wealth creation”. One concrete possibility is to leverage fully on companies that sell their shares to the public on the Yangon Stock Exchange or on any other stock market have successfully been converted into business assets by their owners.

Then again…

15) The wealth management industry (like many other segments of the financial services industry) is facing considerable cross-pressures, there is a pressing need for firms to pursue new ways of doing business while preserving core value proposition to clients. Clients are getting very savvy. Generally younger, technologically- savvy professionals have a greater comfort level with self-directed investing than the older professionals.

16) Also younger professionals have also grown up in a world where new companies routinely disrupt older companies—and often create entirely new industries. As a result, younger professionals are likely�to have a greater openness to directing their monies to entities that rely on new models and different technologies, all at lower cost than established wealth managers. [12]
17) Regardless of who you are, wealth manager, young professionals or experienced professionals, you have to keep your heads up in our hyper competitive world by continuing to upgrade your understanding, skill sets, resources and competencies.

SIAF is here to help

18) As such, signing up a qualification programme with Shenton Institute of Applied Finance (SIAF) could be an important decision in your life, in your knowledge acquisition journey, especially for those who need some forms of structured learning to help you get there faster. SIAF deploys passionate practitioners an to help professionals understand and “get there” faster.

19) Alongside our Partners:

– CISI, (Chartered Institute For Securities & Investments) is a widely respected professional body for the securities and investments industry in the UK and globally.
– Choice Training, is a first amongst equals RTO (Registered Training Organization) based in Townville, Queensland, Australia.
– HELP University, is established by entrepreneurship driven Malaysian Chinese community based in KL, Malaysia

& in the future…

– CFA Institute is a global association of investment professionals. CFA Institute offers the Chartered Financial Analyst designation, the Certificate in Investment Performance Measurement designation, and the Claritas Investment Certificate

20) Together we are offering internationally recognized qualifications in Yangon itself. For instance, Choice Training’s skills upgrading programmes for experienced and young professionals include the internationally recognized teaching certificate, known as “Certificate IV in Training & Assessment” and a “Diploma of Leadership & Management” awarded by the Australian government.

21) Whereas CISI’s offerings include wealth, retail, compliance, risk, operations, capital markets and corporate finance qualifications. These are not mere paper qualifications, but more importantly, these are qualifications provide practitioners with practical knowledge which can be immediately transferred to business activities and client-facing advisory functions and can support you to progress in your personal wealth management and career.

To Conclude
22) To conclude, as we talk about future of stock trading and wealth management for experienced and young professionals. Are you ready to do your part, unabashedly upgrading your knowledge and skills, as a citizen of Myanmar, contributing towards its human capital development and nation building process? At Shenton Institute of Applied Finance and our partners, we are ready. Are you?

23) Thank you.

References:

[1] Anuchit Nguyen & Kyaw Thu “Stock Trading Comes to Myanmar with First Company Listing” [http://www.bloomberg.com/…/stock-trading-comes-to-myanmar-w…] Bloomberg Website. Accessed 13/09/2016

[2] Asian Development Bank “Asian Development Outlook on Myanmar’s Economy” January 2016 [https://www.adb.org/countries/myanmar/economy] ADB Website. Accessed 13/09/2016

[3] Myanmar Population Clock, “Myanmar Population 2016” [http://countrymeters.info/en/Myanmar] Country Meters Website. Accessed 13/09/2016

[4] Motokazu Matsui, “Myanmar’s Strategic Location Attracts China’s Energy Giants” [http://asia.nikkei.com/…/Myanmar-s-strategic-location-attra…] Nikkei Asian Review Website. Accessed 13/09/2016

[5] Mark Mobius, Heinz Ruettimann & Kevin Daly, “Opening Up Frontier Markets” [http://www.pwmnet.com/…/Asia/My…/Opening-up-frontier-markets] Professional Wealth Management Website. Accessed 13/09/2016

[6] Asian Development Bank, “Myanmar in Transition” August 2012 [https://www.adb.org/…/adbs-myanmar-transition-report-offers…] Video of Stephen P. Groff, ADB’s VP for East Asia, Southeast Asia and the Pacific. Accessed 13/09/2016

[7] McKinsey Global Institute, “Myanmar’s Moment: Unique opportunities, major challenges” June 2013� [http://www.mckinsey.com/global…/asia-pacific/myanmars-moment] MGI Website. Accessed 13/09/2016

[8] Wealth-X In the News, Wealth-X Sheds Light On Myanmar’s New Rich For The Wall Street Journal http://www.wealthx.com/…/wealth-x-in-the-news-wealth-x-she…/ Wealth-X Website. Accessed 13/09/2016

[9] Shibani Mahtani, “Meet the New Rich… in Myanmar” Sept 4th 2014 [http://www.wsj.com/a…/meet-the-new-richin-myanmar-1409756369 ] WSJ Website. Accessed 13/09/2016

[10] Part of a series on Spider-Man, “With Great Power Comes Great Responsibility” [http://knowyourmeme.com/…/with-great-power-comes-great-resp…] Knowyourmeme.com. Accessed 13/09/2016

[11] Gobba Godfrey, “Wealth Creation, Business Assets and the Stock Market” [http://www.theinvestmentguru.co.ug/…/wealth-creation-busine…] Wealthy Mindsets LLC. Accessed 13/09/2016

[12] Joint J.P. Morgan Asset Management & Oliver Wyman, “The Future of European Wealth Management: Imperatives for Success” November 2014 [http://www.oliverwyman.com/…/the-future-of-european-wealth.…] Oliverwyman Website. Accessed 13/09/2016

 

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