OTC MARKET H1 | THE POLITICAL SHAKEUP | DIVIDEND STOCKS

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Only 3 days left till Autumn! For those of you who are currently in Ulaanbaatar, don’t forget to devote a little bit more time to commute from now on. Traffic is gonna get worse since everyone’s back in the city after a long summer vacation. 😬

🤔 DID YOU KNOW?

💰 MONGOLIA'S OTC MARKET

In the first half of this year, corporate bonds worth ₮292.6 billion were registered on the over-the-counter (OTC), raising ₮150.1 billion in total.

The big picture

Mongolia’s OTC market began its operation last September, opening its doors to both domestic and international investors. Since then, securities worth ₮965 billion have been listed on it, and a total of ₮577 billion was successfully raised. Currently, only bonds are traded OTC.

By the numbers

• 29 issuers have registered 83 bonds.

• Overall, maturities range from 3 to 36 months, but the bonds that were registered in the first half of this year have a term of 3 to 24 months.

• The lowest 1-year interest rate stands at 10%, the highest - 20.4%. The average interest rate for 12-month bonds is 15%, while that of 24-month bonds - 16%.

• Issuers set the interest payment schedules according to the nature of their business. 53% of them make their interest payments on a quarterly basis, and 31% - semi-annually.

Who are the issuers?

• NBFIs, who’ve listed ₮47.7 billion worth of bonds on the OTC market and raised ₮30 billion, make up 40% of all OTC issuers.

• Other financial institutions account for another 20%. They raised ₮72.2 billion with bonds worth a total of ₮101.7 billion.

• Mining companies issued securities in the amount of ₮76.2 billion, 25% of which were purchased by investors. Mining companies make up only 7% of all issuers.

• Real estate enterprises, accounting for 13% of OTC issuers, listed bonds worth ₮45 billion, 42.2% of which were successfully sold.

Considering there’s currently no company on the OTC market that has defaulted on its bond payments, the market is doing quite well. But then again, it’s only been a year since its inception last year.

⛏ FEATURING COAL MONGOLIA 2022

“Coal Mongolia 2022”, the largest international coal trade, investment conference and exhibition, is soon to take place under the motto “Revival Together”!

This year’s agenda includes important topics, such as New Revival Policy’s implementation in the coal industry, Road Transport Policy, new and ongoing projects, as well as issues regarding the market’s competitiveness, technological advancement and coal processing techniques.

The event is A MUST for industry players to:

• Be on par with the latest trends and developments

• Stay connected with industry leaders

• Get informed on investment opportunities

When: September 7-8, 2022

Where: Shangri-La, Ulaanbaatar, Mongolia

See you there!

🤔 AMENDING THE AMENDMENT?

Have you heard that the parliament of Mongolia, the State Great Khural, has extended its recent irregular session until the end of this month?

The reason - the new constitutional amendment that repealed the amendment of 2019, stipulating that “the Prime Minister and no more than four members of the Government may concurrently hold positions of member of the State Great Khural”, was adopted with 96% of parliament members voting in favor. Changes that are to be introduced to the parliament regarding this amendment will be discussed during the session.

Why was the amendment adopted?

The Constitutional Court ruled that the above provision contradicts the basic principles of Mongolia’s Constitution and goes against its Preamble, as well as Articles 1, 2, 29 and 70.1. Essentially, the new amendment might finally silence the public’s complaint that the State great Khural and Government are not working in unison - more ministers can now become lawmakers.

However, there’s a problem…

People argue that the amendment was made too easily - the Constitutional Court is acting on its own whim. Since the Constitutional Court amended its own amendment that it adopted just 3 years ago, it can be said that its recent decision actually contradicts the previous one. Simply put, the Constitutional Court paradoxically ruled its own decision as unconstitutional.

Anyway, here are the amendment’s consequences:

• The State Great Khural now has full authority over which ministers will be members of parliament.

• The public now firmly believes that the Constitutional Court might amend its own amendments, posing a real threat to the country’s Constitution and democratic principles.

With those changes, Prime Minister Oyun-Erdene.L is expected to introduce his new cabinet members, 18 ministers next week. Some of the current ministers might be replaced but details are not yet out there.

We’ll keep you updated with the results of the State Great Khural’s irregular session, but in the meantime just keep in mind that the changes to be introduced to the parliament aren’t likely to be as catastrophic as some people think. Let’s just wait and see.

📉 DATA STORY

In recent years, it’s become a more frequent practice for Mongolian JSCs to distribute dividends among their shareholders, with many companies now paying dividends on a biannual basis instead of an annual one. JSCs listed on the Mongolian Stock Exchange will distribute a total of ₮153.2 billion in dividends from their 2021 profits. This is an increase of 38.% compared to last year’s ₮110.5 billion.

🏃‍♀️ QUICK STORIES

📌 Inflation Hedging Coin (IHC) celebrates one-year anniversary. Offered for an initial price of ₮0.3 per coin, IHC successfully raised ₮30 billion through an IEO just a year ago and is now trading at ₮0.9. The coin will soon be listed on gate.io, the 5th largest cyprot exchange.

📌 Bers ABS Active SPV’s asset-backed securities subscribed 90.7%. The company is a little short of the target amount of ₮10 billion it’s looking to raise. A total of 116 bids worth ₮9 billion are registered on the Mongolian Stock Exchange as of now.

📌 SUU JSC announces dividend of ₮4.6 per share. The board of the company approved the decision to pay a total of ₮1.6 billion to its shareholders as dividends on August 18. SUU JSC is among many public enterprises in Mongolia that distribute semi-annual dividends..

📌 South Korea's foreign minister arrives in Mongolia to deepen bilateral ties. This is the first visit by a South Korean Foreign Minister to Mongolia since 2014. Foreign Minister Park Jin will hold talks with his counterpart B.Battsetseg and pay courtesy calls on high public officials.

🟦 TOP NEWS

1. Rio Ups Bid to $3.1 Billion to Take Over Giant Copper Mine. (Bloomberg)

2. ADB Provides $100 Million in Emergency Support to Mongolia. (ADB)

3. Minister of Foreign Affairs of the Republic of Korea to pay official visit to Mongolia. (MONTSAME)

4. Mongolia, United States hold 15th annual bilateral consultations. (MONTSAME)