🎙️ MSE CEO INTERVIEW | STATE BANK'S RECORD | EXCHANGE RATE

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Random tip: You can buy MIAT Mongolian Airlines tickets directly on their website. It’s much more convenient and might as well be a little cheaper.

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🏛️ STATE BANK MAKES HISTORY

State Bank’s IPO successfully closed with a 304.5% oversubscription of 7,503 orders worth a whopping ₮67.4 billion - the highest amount in the history of the Mongolian stock market.

• The predecessor: The record previously belonged to Central Express CVS that holds the master franchise of CU convenience stores in Mongolia. The company received orders worth ₮40 billion last summer, significantly more than their total initial offer of ₮25 billion.

What’s next

The State Bank will first allot shares to strategic investors and those whose order doesn’t exceed ₮800 thousand. The remaining shares will be proportionally distributed among investors who bid a higher amount.

• The bank offered only 5% of its shares during the latest IPO and is currently planning to issue additional shares to the public next year, increasing its public ownership to 20-25%.

More banking sector IPOs are coming, with Khan Bank and Golomt Bank planning to go public within this year. They will be followed by the remaining two systemically important banks in 2023 - Trade and Development Bank and XacBank.

2022 and the coming year will surely be a busy period for Mongolia’s stock market. Stick with us to stay tuned!

📈 DATA STORY

It’s worth noting that the tugrik’s depreciation rate is almost equivalent to the average currency depreciation rate of developing countries - which means that, contrary to many people’s belief, not everything is so bad in Mongolia. As the strict monetary policy implemented by the Bank of Mongolia soon begins to bear fruit, increasing the interest rate of savings accounts, people will hopefully have more confidence in the national currency as well.

🎙️ INTERVIEW: CEO OF MONGOLIAN STOCK EXCHANGE

Our Editor-in-Chief E.Zolbayar has recently held a talk with the CEO of the Mongolian Stock Exchange (MSE) Kh.Altai on a twitter space of our Mongolian newsletter called “Lemon Press”. The conversation was accordingly held in the local language, but we’re planning to conduct interviews in English in the near future as well. And for now, here are some translated excerpts from the discussion.

Q: Mongolia has recently been reclassified to Frontier Market status by FTSE Russell. Could you please elaborate on the topic and tell us what opportunities this reclassification may provide?

A: There have been a lot of positive developments in the stock market in recent years, especially in 2022. The status reclassification by FTSE Russel is definitely one of them. By entering the Frontier Market category, we are now on the same level as countries, such as Bulgaria, Estonia, Latvia, Lithuania and Vietnam. 

The companies listed on the MSE that meet specific criteria will accordingly be included in indices open for international retail and institutional investors.

This event also coincides with major “New Revival” policy initiatives, including the banking sector reform, as well as the IPOs of systemically important banks and state-owned companies. These enterprises will now have the opportunity to attract substantial foreign investment. Essentially, the Mongolian stock market is now being recognized by the world.

We now have to work towards reaching the next level of the Frontier Market status, which will demand that our brokers be competitive enough and meet certain prerequisites.

Q: What is the legal environment for foreign investors to participate in Mongolia’s stock market? What does the process generally look like? Can it be considered unproblematic?

Legally speaking, the person who intends to open an investment account must personally sign the relevant contract at a certain securities company. This, of course, poses an issue for many foreign investors who can’t directly travel to Mongolia. That’s why it’s important to make sure that this problem is resolved.

Q: Can you tell us more about the IPOs of the MSE and other state-owned companies?

One of the key topics of the “New Revival” policy is the governance improvement of state-owned companies. In this sense, a plan was developed to make them open to the public. The MSE was the first to assume the responsibility to IPO within 2022 and is currently preparing for it. If you look at the major global stock exchanges, you’ll find out that they are all publicly traded enterprises. So our IPO is a matter of following the international standard. As a result, the participants in the Mongolian stock market will be able to make more flexible decisions as shareholders of the MSE, and we will work towards increasing the returns of our customers as well.

Furthermore, a list of 25 state-owned companies that have to go public first has been released, but the list is not exhaustive. Our IPO will be an example for other major state-owned enterprises and will especially help those at the decision-making level gain more confidence in the stock market.

Q: What are the future strategies and plans of the MSE?

A: We can’t resist the global digital and crypto trend. Instead, we must walk hand in hand with it. For instance, it’s possible to tokenize the stocks of companies registered with us, which will turn into a reality after our IPO. In addition, the Minister of Economic Development made a very important announcement that Mongolia's export products will be traded on the stock exchange. It means the MSE can become a financial institution that also provides export and clearing services.

Read the full transcript HERE. (in Mongolian)

🏃‍♀️ QUICK STORIES

📌 Mongolian telecommunications operator ONDO to partner with Nokia. A letter of intent on the creation of a 5G network and strategic cooperation was signed between the two companies. This will be a bridge for ONDO to enter the global market with new technologies jointly developed with the Finnish giant.

📌 Rio Tinto’s Turquoise Hill takeover vote set for November 1. Turquoise Hill Resources (TRQ) has recently announced the receipt of an interim court order for Rio Tinto to acquire the full stake of TRQ in Oyu Tolgoi, one of the world’s largest known copper and gold deposits in Mongolia.

📌 LendMN approved to issue asset-backed securities (ABS). The company offers quick loans without collaterals using a mobile application powered by AI based credit scoring and is currently looking to raise ₮4.85 billion with their ABS. The interest rate stands at 17% with monthly returns for 24 months.

📌 Bill on state budget of 2023 submitted to parliament. The government’s budget policy for the next year is aimed at implementing state austerity policy, promoting the “New Revival” policy, reducing import pressure and stabilizing the macro economy through the optimal distribution of resources.

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