📈 IPO MONGOLIA | MSE Q1 | TELECOMMUNICATION GIANTS

Happy Easter Monday! Since the predominant religion in Mongolia is Buddhism, Easter is not widely celebrated in the country. However, we still wish our Christian readers a blessed holiday filled with happiness, love, and faith. 🤗

 📌 DID YOU KNOW?

A little about religion in Mongolia: 

• 40.6% of the population is religiously unaffiliated.  

• Among those who practice a specific faith, 87.1% are Buddhists.   

• Christians make up 2.2% of all Mongolians, Muslims - 5.4%, and believers in Shamanism - 4.2%. 

• In terms of gender, women are more religious than men. (2020 Population and Housing Census of Mongolia)

📱 TELECOMMUNICATION GIANTS

Did you know Mongolia was the 25th country in the world to introduce 4G-LTE mobile communication technology? Now, big and small players are racing to deploy 5G technologies, and the rumor has it that it will launch in 2022.

Milestones:

• 1996 Mobicom first introduced mobile services in Ulaanbaatar.

• 1999 Skytel was founded; SMS and international roaming services were introduced.

• 2006 & 2007 Unitel and G-Mobile joined the telecommunication services industry.

• 2008 3G network was introduced to connect to the Internet using a mobile network.

• 2016 High-speed 4G network was introduced.

Mobile consumption

With a 3.4 million population and 4.7 million active cellular subscriptions, Mongolia has an astounding 137% penetration rate, much higher than the world average. Even the number of smart devices is higher than the population, at 3.8 million, showing a growth of 13% over the year. It’s only a matter of time for Mongolia to become a truly digital nation since 99.8% of the country has a mobile phone and 84.3% have an Internet connection. We are experiencing a heightened online presence, as the number of SMS texts sent has been declining over the years while 3G and 4G data usage has almost tripled in only 2 years. 

No place too far

It’s the 40219 km fiber-optic network connecting over 300 soums and districts, that enables a wide range of communication services to local communities at the same rate everywhere regardless of geographical differences. Under the one tariff policy, consumer prices and tariffs were reduced by 2 to 3 times, and conditions for the fair competition were created. This policy incentivized the service providers to increase their investments in rural areas to be able to offer their services everywhere.

Market growth

To keep up with the world and deliver the latest technology to customers, investment is crucial to the sector’s development. It’s important to note that over the past decade $700 million was invested in the telecommunications sector. In 2021, $56.3 million, 61.8% of the total investment was in the mobile network services and made $302 million in revenue. Today, every Mongolian has easy internet access to exchange information, and receive education, health, government, business, and financial services at the tip of their finger.

Future implications

The full integration of Internet services in urban and rural areas has fostered the perfect environment for online businesses. Fintech and the banking industry have taken full advantage of it and now many people opt for mobile banking and stay away from the foot traffic of banks. Furthermore, due to the pandemic, many educational institutions turned to online teaching methods coming one step closer to reducing educational inequality. On the flip side, the negative externality is the unregulated use of social media for children and the unreliable sources easily found on the internet taken without scrutiny.

📢 ​MOODS IN THE METAVERSE

Lucky New Yorkers!

Uuriintuya Dagvasambuu, an artist from Mongolia, is holding her first solo show in New York under the title “Moods in the Metaverse”. Her work focuses on two main themes: the inconspicuous advance of the virtual world into our lives and the global experience of the pandemic. 

About the artist:  

Uuriintuya is a contemporary artist who mixes the Mongol Zurag style with her own innovative practices. She began exhibiting in 2001, and has since held many solo and joint art shows both in Mongolia and internationally. The artist incorporates traditional and Buddhist motifs in her works and draws on experiences of Mongolian women and the everyday lives of post-nomadic Mongolia.

The specifics: 

• Location: Sapar Contemporary, 9 N Moore Street, 1st Floor, New York, United States

• Duration: March 17 - May 7, 2022

📈 MONGOLIAN STOCK MARKET'S BEARISH Q1

As Q1 of 2022 comes to a close and quarterly reports start releasing, let’s take a moment to look at the Mongolian Stock Exchange this quarter. From new stock issuances to price movements, a lot has happened so far. 

Price Movements 

The MSE Top 20 index fell by 13.2% this quarter, a major shift from the 81.5% gain it saw last year during the same period. This drop was led by 15 of the 20 shares on the index. For instance, since the beginning of the year, Ard Financial Group (AARD) has fallen by 43%, Ard Credit NBFI (ADB) by 35%, Tumen Shuvuut (TUM) by 18%, and APU (APU) by 15%. The companies that closed the first quarter with growth were Talkh Chikher (TCK) by 20%, State Department Store (UID) by 11%, Mandal Insurance (MNDL) by 2%, and Monos Khuns (MFC) by 2%.

Stock trading

In the first quarter of this year, trading activity was significantly higher than in previous years, with $31.31 million worth of shares traded. In terms of months, $12 million was traded in January, $2.1 million in February, and $1.9 million in March. In the last two months, trading activity has fallen drastically.

New Products

The new securities issued on the MSE this year are Omni Capital NBFI’s $1.6 million Omni Active Asset-backed security (MONI) and LendMN's $1 million LandBond (LNDB). An annual interest rate of 14.5% was offered to the public for Omni Active and 15% for LandBond.

While the tugrik is depreciating and prices are skyrocketing, there are some things to look forward to in the coming months. The stock market is expected to grow as major banks are currently preparing their IPO alongside IPOs by state-owned companies in the framework of the ‘New Revival Policy’ of the Government, and dual listing of companies that are currently listed in stock markets abroad. These could jumpstart the Mongolian Stock Market once again, so make sure to be on the lookout. 

🔔 EXPORT MONGOLIA: MONGOLIAN SMEs in NORTH AMERICA

Mongolia might seem extremely remote, but with today’s global digitalization nothing is really distant. And if you’re in North America right now, you are much closer to us than you imagine.

How’s that? 

The EITC has helped many SMEs enter the North American markets. Most of them are just a click away.

• Cashmere: Assuming you already know the biggest Mongolian cashmere brand Gobi, it would be worthwhile to get familiar with much smaller, but similarly quality brands like Negun and Siilen Cashmere.

Cashmere aside…

Here are two other notable brands available at the Mongolian Gallery. 

• Khos Az, founded in 2005, makes leather shoes for kids. You can also find their products on Amazon.  

• BABA uses 100% organic nonwoven fabrics to produce their unique fashion items. Their felt shoes are just perfect for spring!

*This article was prepared in partnership with EITC.

🏛️ DATA STORY

As the whole world suffers from the repercussions of the conflict in Ukraine and the preexisting trend of rising commodity prices, it seems that inflation’s ubiquitousness doesn’t need any further explanation. However, the situation appears even worse in Mongolia’s case, because its border to China still remains closed, allowing little to no trade movement with the country’s biggest importer. 

🎫 SPECIAL: IPO MONGOLIA 2022

About: On the occasion of the 30th anniversary of the stock market establishment in Mongolia, the Financial Regulatory Commission and the Mongolian Association of Securities Dealers have recently organized the “IPO Mongolia 2022 - Inclusive Stock Market” forum.

Discussions were held on a wide range of topics, including: 

• Future of the Mongolian stock market

• Development policy and regulation

• Increasing the number of professional investors in the stock market

• Attracting foreign investment

• Importance of IPOs 

• Banking sector reform

Some takeaways: 

• Within the last 4 years, 11 companies went public. Their initial share prices increased by 60% as of 2021. 

• In accordance with the amendments to the Banking Law in 2021, commercial banks of systematic importance have already begun preparing for their IPOs.

• The biggest national companies are encouraged to go public, as their entry into the stock market will not only be a major incentive to attract foreign capital, but also create financial competition for monopolies in the mining sector.

• A number of companies operating in the country are listed on foreign exchanges, but build their businesses on Mongolia’s strategic natural resources. Hence, it was highlighted that it was  important to urge them to issue shares on the native stock exchange.

• Multiple actions are being taken in order to create conditions for the capital market’s infrastructure to better align with international standards.

🏃 QUICK STORIES

📌 Mongolia’s “Team IHC” to participate in CS:GO Major. They defeated Australia’s Renegades and China’s Tyloo at Asia-Pacific Regional Major Ranking, securing the right to compete in the Antwerp Major in May. This is the first time that a Mongolian eSports team has made it to a CS:GO Major.

📌 Erdene Resource (ERD.TO) initiates 1st phase of 2022 exploration program at Khundii Gold District. The program will focus on expanding high-grade gold mineralization discovered at the Ulaan and Dark Horse discoveries at the Bayan Khundii Gold Project, continuing the Altan Nar Gold Project, and testing near-surface, high-grade oxide gold targets across the District. 

📌 Last year Rio Tinto paid $544 million in taxes and royalties in Mongolia, which is roughly  equivalent to its annual budget of the labor and social security sector. Notably, the company has spent a total of $13.4 billion in the country, including $3.3 billion of taxes, fees and other payments to national and local governments since 2010.

📌 Bill adopted to prevent the rise in prices and shortage of key commodities. Notable provisions include the prohibition to export precious metals and foreign banknotes amounting to ₮20 million and more in cash across the Mongolian border, and measures against disruptions in the supply of meat, flour, and gas

👨‍💻 SPONSORED BY EGULEN

Egulen, established in 2013,  is a Mongolian IT company operating in Mongolian, Malaysian, Singaporean, and US markets that develops business-oriented technology solutions. Their products and services include all-in-one POS cash register systems and an online booking platform for personal care and health services. Their next project, a job market platform based on blockchain technology, is aimed at solving the insatiable labor demand of the service industry and is already underway. 

The great news!

Valued at $3.25 million, Egulen is offering 20% of its total shares at a price of $2.6 per share, and the investments are set between $260 to $26,000. However, if you and your company want to be a strategic investor, keep in mind that there is no upper limit.

Take a closer look at their investment proposal and financial projection!

📷 A GLIMPSE OF MONGOLIA

About: The Gobi bear, a.k.a the “Mazaalai”, is a subspecies of a brown bear that lives only in the Gobi Desert of Mongolia. Unfortunately, this messy-looking furry cutie is the rarest grizzly in the world and is considered critically endangered.

What was the cause? 

The two biggest reasons are habitat encroachment and unusual droughts in the past couple of decades. The onslaught of the mining industry’s rapid development, rising temperatures and overgrazing by livestock - all this combined leaves little room for the Mazaalai to live and prosper as a species.

Good to know:

• In 2016, there were only 22 Gobi bears. Thanks to multiple initiatives aimed at saving the animal, this number has risen to more than 50. 

• Gobi bears are chiefly vegetarian, relying on a diet that consists of roots, berries, and other plants. Rodents are a rare treat. 

• They are the only bears that have evolved and adapted to living in extremely hot desert climates.

• The Mazaalai bears have a highly skewed sex ratio of males to females - another reason for their low reproduction rates.

ESSENTIAL LINKS

• Not sure where to eat in Ulaanbaatar? Food and drink reviews in English. (Dodddo0)

• What Genghis Khan's Mongolian sounded like? (NativLang)

• Risks UK businesses may face in Mongolia. (GOV.UK)

• Are the Mongolian stereotypes true? (Real Mongolia)