😎 It's our 1st anniversary!

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It’s our 1st anniversary this week! A little note from our Editor-in-Chief:

"Happy 1st anniversary to our valued readers! It has been an exciting year for foreign investment in Mongolia, and we are proud to have been a part of your journey. We have seen significant growth and development in various sectors, such as mining, renewable energy, and tourism. We look forward to continuing to provide you with the latest news and insights on doing business in Mongolia. Cheers to many more years of success!"

The above note is written by not me but by ChatGPT. Pretty awesome, right? 

It took many years of consistent effort and investment for AI to reach this level. Only now, most people are realizing endless opportunities in AI. I think Mongolia is no different. We are a young and poor country for now but what about in 10 or 20 years? 

A new generation is arising. A lot to change. Wildest experiences to explore. A lot of opportunities to invest. So let us be your bridge to Mongolia. #InvestinMongolia#TraveltoMongolia

E. Zolbayar Co-Founder & Editor-in-Chief Manhattan, NYC

🤔 DID YOU KNOW?

💰 TOP-20 INDEX RENEWED

The Mongolian Stock Exchange (MSE) has recently updated the TOP-20 Index by removing 5 stocks and adding the same number of new companies. The index is renewed each year based on the previous year’s performance.  

• Dropped: Makh Impex, BD Sec, Darkhan Nekhii, Talkh Chikher and LendMN NBFI

• Added: State Bank, CU, Bogd Bank, Sendly NBFI and Golomt Bank

Key takeaways

• Strong new players: Of the 5 new additions, four went public just last year, and the fifth company - in 2021. They are all comparably new to the stock market but were strong enough to replace the veterans like Makh Impex and BDSec.

• Financial enterprises: With 4 of the 5 new companies specializing in financial services, half of the TOP-20 Index companies now belong to this sector. As the remaining 3 systemically important banks IPO this year - the index is likely to become even more dominated by banks, NBFIs, and other financial institutions.

• Growing quality: The index continues to strengthen each year - the addition of the 5 new companies has increased the market value of its portfolio by more than ₮1 trillion to ₮5.4 trillion (year-end valuation).

In the end

The TOP-20 Index reflects the performance of not only the MSE but also the whole of Mongolia’s stock market. This is why it’s so important for us that the index keeps gaining more momentum. Considering it became the fastest-growing index globally with an increase of 130% in 2021, it’s definitely exceeding our expectations. However - it’s not yet time to relax - there are a lot of things to be done, starting from the creation of new index-based investment tools.

 📈 DATA STORY

Last year, the Social Insurance Fund’s (SIF) revenue increased by 26% YoY, reaching ₮2.66 trillion, while it’s expenditure rose by 33% and hit ₮3.38 trillion. As a result, ₮842.8 billion was spent from the state budget to cover the deficit.

82.2% of the SIF revenue was allocated to pensions, 8.7% to the benefits insurance fund, 7.4% to the fund covering workplace injuries and occupational diseases, and the rest to unemployment benefits.

💸 BOGD BANK IN 2022

Here’s how Bogd Bank (BOGD), the first bank to launch an IPO in Mongolia, did in 2022.

A year of great growth

Bogd Bank's interest income increased by 71.9% to ₮44.5 billion, while non-interest income also grew by 1.5 times to ₮14.2 billion. This led to a net profit of ₮19.1 billion - 1.77 times more than in 2021. The bank’s total assets rose by 1.46 times to ₮476.9 billion as well. In terms of other indicators…

• Greater trust: Bogd Bank’s current accounts & deposits increased by 53.8% to ₮188.5 billion. This shows that customers have gained more confidence in their products.

• Improved loan portfolio: Net loans rose by 43.1%, reaching ₮208.1 billion. Of this amount, 4.4% or ₮9.2 billion are, however, non-performing loans.

• Increased equity: The bank’s total equity also grew by 14.9% and amounted to ₮116.7 billion.

• More investors: Similarly, their number of shareholders increased by 19.3% to 1,565.

Highlights of 2022

• New services: Bogd bank’s customers can now choose their account number as they wish. Other newly introduced services include the Corporate Gateway for businesses, as well as Prime Reserve credit card products.

• Investment: They attracted $4 million from the Enabling Qapital investment fund and $15 million - from the U.S. International Development Finance Corporation (FDC). The received funds will be spent on services for small and medium-sized businesses and green financing.

As a last note

With Bogd Bank's shares falling by 20.4% in 2022 - while their total equity increased by 14.9% - the bank’s P/B ratio decreased to 0.96 which makes its stocks a lot cheaper than a year ago.

🏃 QUICK STORIES

📌 Parliament approves the law on protecting human rights on social media. The public regards the new law as a step towards an authoritarian regime. Although the law forbids discrimination and other types of human rights violations, it may be used as a pretext for the government to keep social media under its direct control.

📌 Prime Minister L. Oyun-Erdene proposes constitutional reform. The proposed reform would transition Mongolia from a semi-presidential republic to a traditional parliamentary republic. The transition could improve the policy-making process which has been impeded by periodic disagreements between the President and the Prime Minister.

📌 Mongolia exports 16.1 tons of meat and meat products in 2022. Mainly horse meat, lamb and mutton, as well as goat were exported to 11 different countries. In total, there are 98 animal husbandry companies and 80 meat processing plants operating in Mongolia.

📌 LendMN NBFI JSC posts net profit of ₮5.55 billion for 2022. In the 4th quarter of last year, their loan portfolio increased to ₮71.1 billion - ₮21.4 billion more compared to the previous quarter. Non-performing loans accounted for 4% of total loans.

📌 Democratic Party elects new chairman. A total of four people were nominated for the leader of the party, with L. Gantumur receiving the majority of 152 votes and winning in the end. Gantumur had previously promised to change the electoral system should he be elected as the chairman.

📌 Parliament approves the law on investment banking. Foreign and domestic enterprises can now operate in Mongolia s investment banks by obtaining a special license. The Bank of China - the representative office of which was established in Ulaanbaatar long ago - may now open its own branch in the country.

🟦 TOP NEWS

1. Mongolia's Economic Outlook Remains Lacklustre (Fitch Solutions)

2. Foreign workers in Mongolia decreased by 43.9 percent (MONTSAME)

3. Mongolia: Politics and Protests in 2023 (The Diplomat)

4. MIAT Announces Special Tariff to Promote Winter Tourism (MONTSAME)

5. Lunar New Year: History, Significance and all you need to know about the Year of the Rabbit (The Economic Times)