Capital Markets

The State Property Committee (SPC) created the Mongolian Stock Exchange (MSE) in 1991 as a vehicle for privatising state assets during the transition to a market economy. Despite early attempts to broaden the share ownership in state firms, shares became concentrated in the hands of a few, and, by 2010, it was estimated that 80% of the market’s capitalisation was owned by a dozen individuals. The MSE experienced a record-breaking year in 2011 when share prices surged thanks to foreign investor interest in the commodity-driven economy. Mining sector stocks performed especially well, with some coal producers seeing shares rise over 200%. Strong growth prospects over the medium term will ensure high returns for investors and will likely lead to the strengthening of the local currency. While some value investors will snap up cheap valuations during the economic rebound expected in 2013, the enactment of the new securities law is crucial to opening the market to new liquidity and issues. This chapter includes a viewpoint from James Passin, Principal, Firebird Management.