Macro Research

Mongolia Outlook 2012. World's Fastest Growing Economy

14 Feb 2012

World's Fastest Growing Economy

Mongolia Outlook 2012Mongolia continued its strong performance in 2011 in terms of the pace of economic growth, equity market, exports and foreign direct investment inflows. The country's performance in 2011 has exceeded nearly all our projections we made in our Mongolia Outlook 2011 report published in January 2011. We estimate Mongolia overtook Qatar and has become the world's fastest growing economy in 2011 (the summary of key developments in 2011 is provided on pp 4-6). Investor sentiment and attractive valuations have supported the stock market and ranked this frontier market as the second best equity market globally last year. Robust international commodity prices and firm demand in China, the key market for Mongolian commodities, have boosted exports to an all-time high. Accelerated development of the Oyu Tolgoi project and investor appetite for quality resource assets have attracted a record level of foreign direct investments. We believe that Mongolia that is emerging as a key commodity supplier in Asia will continue its stellar performance through 2012 and beyond. Read more

9M GDP up 10.2% YoY. Growth Slowing but Remains Strong

18 Oct 2012

Strong growth. Mongolian economy expanded 10.2% y-o-y in the first nine months of 2012, the National Statistics Office of Mongolia released last week. Three quarter cumulative GDP is MNT9,922bn (US$7,112mn), up 23.5% y-o-y in nominal terms. The economy has been gradually losing its growth momentum since 1Q. On quarterly basis, real GDP rose only 0.7% q-o-q and 5.6% compared to 3Q 2011. GDP grew 16.5% y-o-y in Q1 and 13.2% y-o-y in Q2. Growth in all sectors – agriculture, industry and construction, and services – has been slowing. In particular, services sector growth markedly slowed to 17.5% y-o-y in Q1, 10.7% in Q2 and 9.4% in Q3. Read more

Mongolian Stock Market: Capitalizing on Frontier Opportunities

11 Apr 2011

mongolianThe Mongolian Stock Exchange (MSE) had an impressive year in 2010 as the best performing equity market globally. Driven by positive investor sentiments, the market still retains the title this year, climbing +64% YTD (+73% in US$ terms due to a 4.9% YTD appreciation of the MNT against the US$ as of March 31). We anticipate such strong performance will continue throughout 2011, fuelled by resource‐linked investments and developments. Read more

Mongolia Outlook 2010: Global Outperformer or Start of Multi-Year Bull Market

31 Jan 2010

We believe that the Mongolian economy has bottomed out and is expected to grow rapidly over 8% in 2010 thanks to launch of major mining projects and strong inflows of foreign direct investments (FDI).  Various estimates suggest that Mongolia’s economy may grow 30-35% per year after the Oyu Tolgoi mine starts operation in 2013. Encouraged by the go-ahead in the Oyu Tolgoi project and the Government’s strongly stated interest in speeding up other major deals, foreign investors are already snapping up smaller companies with assets in Mongolia. The quest for resources by larger foreign companies will likely boost M&A activities that would further boost the economic expansion in Mongolia.

In our view, the banking sector in Mongolia still remains vulnerable, due to the lingering effects on the global economic crisis on the Mongolian economy primarily through escalating non-performing loans and the lack of funds for recapitalization. In our view, the Mongolian banks may face further stress and even failures on increasing NPLs this year unless the central bank takes immediate effective actions. We expect MNT to appreciate up to 10% against the USD by the end of 2010 on the base of expectations that the Mongolian economy will receive substantial foreign investments and export revenues will surge due to projected increases in international prices for the major Mongolian export commodities. 

In our view, in 2010 MSE Top 20 Index will gain +76% reaching 11,000 level, catapulting Mongolia into the world’s top three best performing markets.  Mongolia will likely to become the best performing equity market in Asia in 2010.  The overall improved business environment in Mongolia, the launch of Oyu Tolgoi, the selection of the foreign partner(s) for Tavan Tolgoi, the Government initiatives to establish and list the “national champions” internationally and locally and to reform the Mongolian stock exchange as well as growing interest of international investors in the Mongolian stocks and resources would be main catalysts for the expected rally in 2010.

We firmly believe that 2010 will herald the start of multi-year bull market for Mongolian equities and assets.  In coming years, Mongolia will emerge as the star performer among equities globally. We advise investors to seek actively the exposure to the Mongolian equities and assets as we believe the earlier investors will be richly rewarded over the coming years.

To read full report, please click here !

Mongolia Outlook 2011: Global Outperformer Surging Higher

11 Jan 2011

mongolia outlook 2011Mongolia produced a truly impressive performance in 2010, leading globally as the best equity market, second fastest growing economy and the second best performing currency. Driven by strong resource-linked investments and developments, we anticipate this exemplary performance will continue through 2011.

We expect the Mongolian economy to grow up to 10% in 2011 (or 33% in US$ terms due to further estimated appreciation of the MNT against the US$) and may continue outperforming, ranking among the top three fastest growing economies. The primary growth drivers for 2011 will be the US$2.3bn capital budget (over one-third of Mongolia’s GDP in 2010) allocated by Ivanhoe Mines and Rio Tinto for Oyu Tolgoi, strong and growing investments across the mining sector as well as other asset classes, the substantial increase in government expenditures, the positive outlook for commodity prices, rising export values driven by strong Chinese demand and growth in personal income underpinned by inflows of foreign capital and the expansion in government social payments. Read more

China and Eurasia

20 Oct 2009

eurasia guideEurasia will remain an important region for China in securing an access to natural resources and produce political stability in the region as well as exporting its goods, originated from the northern-western regions of China. Facing further increased demand for natural resources, cash-rich Chinese companies will continue to acquire commodity assets by investing in energy and commodity projects in Eurasian countries for future guaranteed supply. Along with resource companies, Chinese sovereign wealth funds are likely to increase their exposure to the region by diversifying their portfolios in favor of natural resources on optimism that the world economy will recover sooner than later that will lead to rebound in prices. Eurasian countries will also maintain their interest in strengthening economic and political cooperation with China to sustain the balance of power amid rising competition for the region’s abundant natural resources by Western countries and Russia. In order to diversify export markets of natural resources, mainly oil and gas, and growing concerns around Russia-Ukraine and uncertainties along Russia-backed routes to European Union countries, the Eurasian countries are likely to intensify the construction of China-oriented oil and gas pipelines. China, in return to the Eurasian countries’ will to provide access to commodities, will continue to support these nations with low-interest rate loans through various channels, including the Shanghai Cooperation Organization, CAREC or bilateral arrangements.

To read full report, please login.


Eurasia Guide

20 Oct 2009

eurasia capital research report, eurasia guideFull comprehensive Guide to Eurasia Frontier markets:



To read full report, please click here !


Mongolia Guide, Dec 2009

20 Dec 2009


mongolia guideRecord commodity prices, before onset of the global economic downturn, was fuelling the Mongolia’s economic growth. Overall resources accounted for 84% of total exports, including copper – 40%. Mineral revenues accounted for more than one-third of the government revenues, a 68% windfall tax on sale of copper and gold being the main source. The collapse of commodities prices brought economic downturn to Mongolia, in particular significantly deteriorated current account which was in surplus in 1H2008. The Central Bank of Mongolia attempts to prevent rapid depreciation of the togrog, the Mongolia’s national currency, failed to bring much result, but led to depletion of hard currency reserves that shrank to US$648mn at end-1H2009 from US$1bn at end-2007. In 1H2009, total external trade declined 44.3%YoY, including exports 40.2%YoY and imports 47.3%YoY. The Government revenues fell 20%YoY, including collection from the windfall profits tax declined 86%YoY, corporate income tax 51%YoY and VAT 19%YoY. On concerns of economic fundamentals, the IMF estimates economic growth slowing significantly to 2.7%YoY in 2009 from 8.9% YoY last year.

Mongolia: Challenges And Opportunities

10 Sep 2009

eurasia capital research mongolia challenges opportunitesShockwaves the recent commodities slump sent through the Mongolian economy are yet another example of boom and bust cycle dangers. This report takes a quick glance on foreign investments and recent economic developments in Mongolia. The paper notes that despite current economic difficulties, Mongolia has immense economic potential and offers unique opportunities to investors. Unlocking these opportunities is a challenge faced by the Government as well as business in Mongolia...

To read full report, please login.