📈 $21.2B FOREIGN TRADE | $650 GOVERNMENT BOND | LESS&LESS YOUNG HERDERS

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Craving something hot in this freezing cold? Try out the Mongolian hot curd drink called “Aarts”. Here’s the recipe.

🤔 DID YOU KNOW?

📈 FOREIGN TRADE IN 2022

Mongolia’s foreign trade reached $21.2 billion last year - a 32.1% growth compared to 2021.

Historical high

Both exports and imports hit their record levels, with exports rising by 35.7% to $12.5 billion and imports - by 27.2% to $8.7 billion.

• Balance of trade reached an all-time high of $3.8 billion as well. The revival of the mining sector and the increase in exports played a major role here. Notably, Mongolia’s foreign trade balance has been positive since 2014.

Trade partners

Last year, we traded with 161 countries, including China, Russia, Switzerland, South Korea and Japan. China remains the main trade partner of Mongolia, accounting for 84.3% and 35% of total exports and imports, respectively.

Goods traded

• Sold: As usual, exports in 2022 were dominated by mining products - 51.8% of total exports were coal, 21.8% - copper concentrates, and 9% - unwrought gold.

• Bought: 19.8% of all imported goods were petroleum products, 6.6% - passenger cars, and 2.1% - electricity. It’s worth noting that the import of gasoline increased by 18.8% to 680 thousand tons, while that of diesel fuel was down by 0.7%.

In the end

Mongolia still remains “Minegolia”. Whether we will transform into a manufacturing country soon enough - is a question that can’t be answered easily. With major non-mining companies like Gobi (GOV) and APU (APU) trying to expand their foreign frontiers, there are some signs of progress, but time will tell…

 🐑 DATA STORY

In 2021, the total number of herders stood at 305.4 thousand, which is 5.4% more than in 2012, but 1.9% less compared to 2016. The maximum number of 311 thousand was recorded in 2016 when herders started receiving subsidized loans under the support program specifically aimed at them. The decline in the number of younger herders is likely due to the massive rural-to-urban migration to the capital city.

💸 NEW GOVERNMENT BOND

The Government of Mongolia has issued a $650 million 5-year bond with a coupon rate of 8.65%.

Why?

The newly issued bond will refinance the $800 million Gerege and $600 million Kuraldai bonds that will mature this year.

• The new bond: The government successfully traded $650 million in new bonds on international markets on January 10. The interest rate was expected to be between 11% and 12%, but it was set at 8.65%, as orders worth as much as $4 billion were received from 138 investors. The success was likely due to the Standard & Poor's credit rating for Mongolia which currently stands at B with stable outlook.

Good enough!

The bond’s conditions may be worthy of praise, especially in circumstances like these…

• Deficit: Mongolia's budget balance has been in the deficit in 9 of the last 10 years. The total deficit of the last decade is ₮17 trillion - an amount roughly equal to the budget income of a whole year.

• Debt: In the third quarter of last year, our foreign debt more than doubled from a decade ago, reaching $32.4 billion. If we divide this number by Mongolia’s population - that’s a per capita debt of ₮32.9 million.

• Shortage: In addition, foreign exchange reserves declined sharply last year, dropping to $3.4 billion at the end of 2022 - 22.4% less compared to the previous year.

As a last note

Mongolia has issued 7 international bonds worth $5.2 billion since 2012. Of these 7, only the Chinggis bond helped finance more than 1,660 domestic projects - the rest were used to refinance previous bonds.

🏃 QUICK STORIES

📌 Mongolian Mining Corporation (975) to invest $40 million in Erdene Resource Development Corp. (ERDN). In return, the MMC will receive a 50% stake in its subsidiary, Erdene Mongol LLC. After the news, ERDN rose by 20% in Toronto, but fell by 3.5% on the Mongolian Stock Exchange.

📌 Mongolian Stock Exchange (MSE) starts registration of bidders for e-auction of export coal. The government has previously approved a regulation that requires export coal to be traded digitally. The trial version of the process has been organized successfully.

📌 Bank of China to open branch in Mongolia? The parliament has recently discussed the draft law on investment banking. If adopted, the bill will allow the Bank of China - the representative office of which was established long ago - to open its own branch in the country.

📌 286.3 thousand tourists visited Mongolia in 2022. This is 8.6 times more from the previous year. The number of tourists from Russia increased by 12.2 times, South Korea - 23.1 times, Kazakhstan - 24.1 times, and China - 1.9 times.

📌 Mongolian Stock Exchange (MSE) closes at ₮162 after first week on secondary market. Compared to the initial price, this is a 62% increase. The total trade volume stands at ₮10.1 million, with 50.6 thousand shares traded on the first day.

🟦 TOP NEWS

1. Fitch Assigns Mongolia's Proposed USD Bonds 'B' Rating (Fitch Ratings)

2. Higher coal cost expected as Mongolia wants to dial up export prices (Global Times)

3. A Mining Road Through the Gobi? (Global Press Journal)

4. Steppe Gold sees 180% year-over-year increase in gold production at ATO project in Mongolia (Proactive Investors)

5. Mongolia to Host Continental CS:GO Tournament (MONTSAME)