🚀 POLICY RATE HIKE | EAT AND PARTY IN UB | INVESCORE FPO

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🎢 ANOTHER POLICY RATE HIKE

Last week, the Monetary Policy Committee (MPC) of the Bank of Mongolia (BoM) announced its decision to raise the policy rate by 1.0 percentage points to 10.0%. The BoM has already raised the policy rate three times this year after keeping it at a decade low of 6.0% during the pandemic.

Our discussion with BoM

Right after the announcement, we hosted the twitter spaces with Bayardavaa.B, Director General of the Monetary Policy Department of the BoM. Here are some key takeaways:

Inflation expectation is important. The central bank has been hesitant to raise the policy rate up until this March for several reasons. First, current inflation, 15.1% as of May, is cost-push inflation which means it’s mostly driven by supply costs. Second, the economy needed a boost during the pandemic. However, prolonged high inflation could severely impact public inflation expectation which in turn continues price increases.

Global interest rate hikes left no options. All around the world, central banks have raised their interest rates which increases the required rate of returns. If the BoM doesn’t raise the interest rate, the value and attractiveness of Tugrik will be diminished and that will cause currency depreciation.

The BoM should focus more on price stability, not currency stability. Current central bank law states that the main objective of the BoM shall be to ensure the stability of the national currency. However, this needs to change. Currency stabilization attempts will leave no space for low policy rates and also depletes foreign exchange reserves.

Budget discipline needs to be maintained. Large budget deficits directly impact macroeconomic stability risks, exchange rate, the balance of payment as well as current account. The central bank has no choice but to keep a tight monetary policy to counter budget deficits.

By the way, send us your thoughts or questions regarding this decision and Mongolia’s economy in general.

💰 DATA STORY

In terms of industry, the mining sector became the only sector that was granted fewer loans than last year. This can be explained by the fact mining companies are currently not able to operate at their full potential due to China’s border closures. Nevertheless, considering that most industries are experiencing loan growth, the economy is definitely witnessing signs of recovery - which, unfortunately, may fade as a result of the recent interest rate hike.

💃 WHERE TO EAT AND PARTY IN ULAANBAATAR

Short and concise with no fluff. Do take a screenshot!

Good food for a good mood

1. Best breakfasts: Millie’s Espresso, ROC Caffeine Bar, Bean & Bread 

2. Mongolian cuisine: Mongolian’s, Modern Nomads-2, every other place in Ulaanbaatar 😅

3. Japanese: Sakura, Takesan, IkiGAi, Noka, Hana

4. Chinese: Hutong, Golden Dragon, Yu Long, Lotus Tang

5. Indian: Hazara, Namaste, Delhi Darbar

6. Korean: Jangsu Korean Steak House, Sura, Yuna, Seoul Restaurant 

7. Mexican: La Rosa Tapas & Tequila Bar, MexiKhan

8. Hot Pot: The Bull

9. The burger places: The Birch, Better, Fat Hen Chicken, The Broski St.

10. Vegan & Vegetarian: Loving Hut, Luna Blanca, White Tara

11. Mediterranean & Western: Choijin Temple Restaurant, Veranda, Rosewood Kitchen + Enoteca, Terrazza, California

Late night chit-chat

1. With entertainment: Fat Cat Jazz Club, 976, Cielo Food N Bar

2. Awesome drinks: The Bar, Bitsy & Co., Grazie, Brussels Belgian Beer Cafe

3. Cute & easy: Kaktus Zone, Yello Beverage Stop, Green Zone

4. Wine to feel fine: Cork Wine & Kitchen, Route 22, Veranda, Choijin Temple Restaurant

5. Calm & soft: Greyseed, Zoma

A little dancing never killed nobody

1. Young & diverse: ZU, CHOCO, EON

2. Mostly techno: CUE+, Lava, Funkhaus

3. A bit fancy: La Fontana (707)

🏃‍♀️ QUICK STORIES

📌 Mongolia to participate in France’s Sommet de l'Elevage as guest of honor. The Sommet de l'Elevage is the leading European forum for livestock professionals that will be organized later in October. Last year, the event was attended by more than 1,510 participants and around 93,000 guests and delegates from 33 different countries.

📌 Japan’s SB Energy and Elixir (ASX:EXR) eye a gigawatt-scale green hydrogen project in Mongolia. The parties have recently signed a MoU regarding the matter, and will soon undertake certain pre-feasibility studies in order to develop a small-scale pilot project that could pave the way for the larger scheme.

📌 Simple Asset SPE LLC successfully completes initial offering of ABS. It only took 2 days for the company to close the primary market offering worth $16 million - a record number in the history of asset-backed securities on the Mongolian Stock Exchange.

📌 Mongolian Gobi to prepare people for Mars. Mars V, an international institute of space science and technology, is working to build an astronaut training base in the Gobi. The desert has very similar conditions to that of Mars, with temperatures dropping as low as -42°C.

📈 INVESCORE NBFI JSC TO OFFER ADDITIONAL SHARES

Invescore NBFI JSC, a leader of the Mongolian NBFI sector, is offering 4 million shares worth 5.28% of the company to the public.

The share price will be set at $1.33 for a total value of $5.3 million. Trading starts today on the Mongolian Stock Exchange and will continue until July 1, 2022.

Should you be interested, contact the underwriters Golomt Capital or InvesCore Capital.

🟦 TOP NEWS

1. Tapping into the Opportunities in Mongolia’s Transition from Mining to Minds. (China Briefing)

2. EBRD and EU help English language franchise grow in Mongolia and beyond. (EBRD)

3. Mongolia establishes nationwide program to minimize road accidents. (MENAFN)

4. Watch: 'The Fourfold' Animated Short Explores Mongolian Animism. (Short of the Week)

5. Erdenet Rail Terminal FEED study completed. (World Coal)

6. Rio Tinto to help Mongolia tackle climate change, desertification. (Reuters)

7. Mongolia becomes China’s largest coking coal supplier in May. (Fastmarkets MB)

8. Wrestling with the future of rugby in Mongolia. (Rugby World)

🌊 GLIMPSE OF MONGOLIA

About: Considered one of the oldest lakes in the world, Ulaagchiin Khar Lake was formed around 5,000 years ago and has been a Strictly Protected Area since 2010. Although the lake is located quite far from the capital city - 1160 km west of Ulaanbaatar - it still attracts many local and international travelers throughout the year.