🏛️ MONGOLIAN STOCK EXCHANGE IPO | ECONOMY IN A NUTSHELL | KEY POLICY RATE 2022

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Don’t worry! You don’t have to make a list of resolutions for the coming year. Whatever you're thinking of, just be consistent and trust the process.

🤔 DID YOU KNOW?

🏛️ MONGOLIAN STOCK EXCHANGE IPO

The IPO of the Mongolian Stock Exchange (MSE) starts today. Below are the most important points from their 548-page prospectus.

The numbers

• 34%: The MSE is offering its 34% stake to the public. Currently, the Ministry of Finance fully owns the company. 70% of offered shares will be allocated to strategic investors.

• ₮35 billion: The exchange is valued at ₮35 billion, 34% or ₮11.9 billion of which is planned to be raised during the IPO.

• December 26-30: The primary offering will continue until December 30, or up until the last work day of this week.

The MSE today

The company surprised many with their revenue of ₮5.5 billion and net profit of ₮3.2 billion in 2021, making headlines around the world as the top performing stock market highlighted by Bloomberg. Despite the significant decrease in trading activity this year, the MSE still managed to keep its operations on track and is expected to post a revenue of around ₮5 billion. The IPOs of systemically important banks, of course, play an important role in the company’s success.

The MSE looking forward

The future of any exchange is determined by the frequency of new stock issuances and the amount of trading activity. In this sense, the MSE seems to be quite well positioned.

• Plenty of choice: The MSE is the first of 25 state-owned companies required to go public, which means that there are 24 more to come. Three systemically important banks, Khan Bank, Trade and Development Bank and XacBank, are also expected to IPO next year. Certain amounts of export coal are going to be traded through the MSE as well. As a result, the MSE is forecasted to earn ₮2.1 billion next year from registration fees alone.

• Active trading: The listing of new stocks and securities is sure to increase trading activity. This will definitely bring the MSE additional revenue, as trading fees usually act as the main source of income for stock exchanges. As of now, the MSE earns ₮2.5 billion from trading fees annually - by 2025, this number is projected to reach ₮7.2 billion.

Contact the main underwriter, InvesCore Capital, at 7755-0077 or visit icapital.mn for more information. May your decision be wise!

📉 DATA STORY

America’s Fed has also raised interest rates 6 times in 2022, but unlike Mongolia, the United States has actually seen a decrease in inflation from 9.1% to 7.1%. Changes in interest rates don’t tend to have immediate effects in Mongolia, so the results of the central bank’s decisions will start to show only at the beginning of the coming year. As of now, the key policy rate equals 13%, 2.2 times more than at the start of the year.

📱 FEATURING UNITEL EXPAT

Unitel Expat celebrates 1 year anniversary!

In case you didn’t know…

They provide exclusive telecommunications services in English and Chinese specifically tailored for foreigners living in Mongolia. They also have a biweekly English newsletter called “Expat News” that covers expat friendly products and business opportunities, as well as features interviews of top Mongolian brand and company owners.

The 2023 Expat News will deliver even more interesting content and fresh perspectives! So use the QR codes above to subscribe and receive both remote and onsite assistance from their team of professionals.

Start the new year with Expat News Vol 3.0! Happy New Year! 🔔💌🎉

🥜 2022 IN A NUTSHELL

Yes, you did blink, and the year is almost over. Before you blink again, here are 5 facts you should know about the Mongolian economy in 2022…

1️⃣ Key policy rate raised 5 times

The price of vegetable oil has increased by 34.3% and that of flour by 48% since the beginning of the year. As a result, the inflation rate, which stood at 14.6% in January, reached 16.1% in June. On December 16, the Bank of Mongolia accordingly increased the key policy rate for the 5th time this year to 13% in order to tame the raging inflation, but it still remains 2.4 times higher than the target level.

2️⃣ Tugrik weakens 20.5% against dollar

At the start of 2022, one American dollar was equal to 2,848 tugriks, but is now worth around as much as 3,440 tugriks. What’s worse is that Mongolia’s official foreign exchange reserves dropped to $2.69 billion in August this year, the lowest amount since November 2017.

3️⃣ $32.4 billion foreign debt

The total foreign debt reached $32.4 billion as of the third quarter of 2022, which is a 2.6% decrease from a year ago. Notably, Mongolia finished repaying its $1.5 billion Chinggis bond this December by transferring the remaining $136.8 million to investors. The ¥30 billion Samurai bond will also be fully paid off in 2023 with the help of collecting the repayments of the scandalous non-performing loans of the Development Bank of Mongolia.

4️⃣ 3.7% economic growth

Mongolia's GDP calculated with the value added approach and 2015 as the base year reached ₮20.3 trillion in the first nine months of 2022, an increase of 3.7% from the same period of the previous year. The Bank of Mongolia predicts that the economy will grow by 5% in 2023.

5️⃣ Biggest state budget in history of Mongolia

The parliament approved a state budget with an income and expenditure that are respectively 20.4% and 14.3% higher than those of the current year. To be exact, the total income of next year's state budget is expected to be ₮19.6 trillion, while the expenditure is set at ₮20.5 trillion.

🏃‍♀️ QUICK STORIES

📌 Mongolian National Democratic Party merges with Democratic Party. On December 24, Chairman of the Mongolian National Democratic Party B.Tsogtgerel announced the end of his party’s activities and the decision to fully merge with the Democratic Party.

📌 Draft law to exclude close relatives of government officials from leadership positions is being prepared by the Ministry of Justice and Internal Affairs. The law is aimed at providing equal opportunities to Mongolian citizens and will apply to immediate families of members of parliament, government and deputy ministers.

📌 XacBank secures $80 million funding. The bank has recently signed an agreement to receive $50 million and $30 million financing from the FMO (Dutch Entrepreneurial Development Bank) and the Swiss-based BlueOrchard, respectively. The funds will be used to support women’s entrepreneurship and small and midsize businesses.

📌 Australia’s Jade Gas to sign binding sales deal in Mongolia. The company has signed a memorandum of understanding to supply gas to power Xanadu Mines’ Kharmagtai copper-gold development. The parties will negotiate commercial terms for a binding agreement after Jade’s 2023 pilot production program for the TTCBM project.

🟦 TOP NEWS

1. India to Finance Mongolia’s Greenfield Oil Refinery Plant (The Diplomat)

2. Thousands protest inflation, corruption in Mongolia (The Militant)

3. Mongolian Government provides major boost to the country's thriving tech sector with launch of 'Mindgolia' procurement portal (Newswire.ca)

4. Mongolia becomes one of six countries to join N4H initiative (AKIpress News Agency)

5. Mongolian Artist Chadraabal Receives "International Art Award" (MONTSAME)

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