Six months after President Barack Obama visited Myanmar, that
country's president, Thein Sein, will visit the White House.
Sein's visit to Washington, D.C. marks the first such visit by
a leader from the Southeast Asian nation in nearly five decades
and it is one that again puts the spotlight on Myanmar's
burgeoning but controversial investment thesis.
As is often the case with many countries sporting the emerging
or frontier labels, Myanmar possesses ample economic potential.
For investors, there is also plenty of risk. After serving as a
stage for allied and opposing forces' operations during World War
II, Myanmar's infrastructure was ravaged. Military rule dominated
the country during the 1990s despite supposedly free
Today, the country lacks a sophisticated legal structure, an
advanced banking system and robust foreign exchange operations.
Those factors make for a series of red flags for even the most
adventurous investors. An unfortunate reality is that Myanmar, a
country as large as France, has lost 50 years of economic
according to Economy Watch
However, Sein is working to change his country's image and his
visit with Obama plays a part in that mission. It also serves as
a reminder that Myanmar, currently a virtually inaccessible to
most U.S. investors, is worth keeping an eye on.
Vital Statistics Numbers do not lie and that saying is
encouraging when it comes to Myanmar. Granted, the country is
starting from a low base, but its real GDP has grown an estimated
five to six percent over the past four years and that number
could climb to six to eight percent over the next decade,
according to Economy Watch. Assuming a growth rate of six to
seven percent, Myanmar could be on par
with recent numbers seen out of the
Statistics released earlier this month indicate foreign direct
investment to Myanmar is surging. In the fiscal year ending in
April 2013, Myanmar attracted $1.419 billion in foreign direct
investment, an almost fivefold increase over the previous fiscal
according to Reuters
. China, Hong Kong, Japan, South Korea and Singapore were top
contributors to that figure.
Bolstering the case for further foreign investment in Myanmar,
the Myanmar Investment Commission believes it is close to
receiving Generalised System of Preferences status from the
European Union, Reuters reported.
Despite those enticing statistics, Myanmar remains a difficult
country to access for foreign equity investors. Although it is a
member of the Association of South East Asian Nations (ASEAN),
Myanmar's stock market is not nearly as advanced as those in
other ASEAN member states such as Singapore, Thailand or the
Myanmar's bourse was actually closed in the 1960s at the hands
of the military regime that ruled the country at the time and in
2011, there were just two companies on the Myanmar Securities
Exchange where prices were updated on a whiteboard,
Change is afoot, however, as the operator of the Tokyo Stock
Exchange, South Korean and Thai rivals are looking to establish
advanced exchanges in Myanmar. In January, the Stock Exchange of
Thailand and the Myanmar Central Bank signed
an agreement that calls for the former
to support the establishment of the Myanmar Stock Exchange.
Available Options The best avenue for investors to get
involved with Myanmar is through
, although a Myanmar-specific ETF may be a long way off. For now,
any ETF that is used as a Myanmar play is an indirect route to
the country, but one of the better ideas is the iShares MSCI
Thailand Capped Investable Market Index Fund (NYSE:
THD, a high-flying emerging markets ETF in its own right with
a year-to-date gain of almost 14 percent, allocates almost 39
percent of its weight to financial services names. That could
give the ETF some exposure to an advancing Myanmar financial
system, particularly if the Stock Exchange of Thailand is
successful in establishing a sophisticated bourse in Myanmar.
Thailand, while not always a beacon of political stability, is
one of the more stable nations in the region and shares
a border with Myanmar
. That could provide for enhanced trade between the two as
Myanmar's economy evolves in the coming years.
The Global X FTSE ASEAN 40 ETF (NYSE:
) is another option to consider, though the ETF's name is
somewhat deceiving. ASEA does not offer exposure to all of the
ASEAN nations and the bulk of the fund's weight is allocated to
Singapore and Malaysia, though the ETF does offer some decent
exposure to Indonesia and Thailand, which have been two of the
better performing emerging markets this year.
Risk-tolerant investors can consider the Market Vectors
Vietnam ETF (NYSE:
). Like THD, VNM is heavily allocated to the financial services
sector, an issue that cannot be ignored as Vietnam works to
alleviate its banks of bad debt and sour
. However, VNM could prove to be a legitimate play on Myanmar's
growing economy as the two countries recently reached an
agreement to increase bilateral trade
to at least $500 million by 2015
For more on ETFs, click
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