Tomorrow's Emerging Markets Today
Mongolia is a landlocked country bordered by Russia to the north and China to the east, south and west. With an area of more than 1.5 million square kilometers, it is the world’s 19th largest country. Ulaanbaatar, Mongolia’s capital city, is located in the north central part of the country and features Mongolia’s only international airport. The southern third of Mongolia is dominated by the Gobi Desert that continues southward into China.
Mongolia is expected to be one of the world’s fastest growing economies from 2010 to 2012 according to the International Monetary Fund (IMF). The IMF forecasts that the real GDP growth of Mongolia will amount to 24.8% in total during 2010-2012, driven largely by advancements in the mining sector. The economy is dominated by agriculture and mining, which provides circa 60% of export earnings. According to a March 2010 Economist Intelligence Unit article: “Mongolia is looking forward to a period of unparalleled economic growth over the next decade as major mining projects finally move forward. Observers realistically talk of GDP doubling in the next five years and even quadrupling in a decade.” Entry of global giants like Rio Tinto and Ivanhoe in the mining sector is expected to lead to strong growth across multiple segments of the economy. Mongolia has rich mineral resources and exploitation of these resources is increasing rapidly. There are over 8,000 deposits of 440 different minerals in Mongolia. The government has targeted a number of strategic deposits to be the core focus of Mongolia’s mining industry.
The emerging Mongolia stock market experienced rapid growth in 2010 with the MSE Top 20 index up 110% for the year. In addition to mining growth (Tavan Tolgoi up 270% in 2010), there are large domestic companies that are growing at a rapid pace, such as APU, the largest Mongolian beverage producer, up 161% in 2010. In an effort to modernize the stock market and integrate international exchange management, the government has appointed the London Stock Exchange to advise on the development and privatization of the MSE, involving comprehensive reforms and upgrading of the MSE, including modernization of market rules and operations and expansion of tradable asset classes. This is expected to increase the efficiency and transparency of the stock exchange and boost international investor confidence.
Since 1991, Mongolia has been working to implement a comprehensive economic reform program aimed at moving the country towards a free-market economy. Ruled by a legislature, a directly elected president, and a prime minister elected by the parliament, one of the primary objectives of this program has been to encourage foreign investment to stimulate economic growth and several laws have been adopted in that regard.read more
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