📉 THE WEAK TUGRIK | MSE TOP 20 INDEX | INTEREST RATES ON DEPOSITS

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Good morning! Sharing with you a must-watch documentary about the intimate relationship between Mongolian nomads and wolves. Save it for later!

🤔 DID YOU KNOW?

📉 MONGOLIAN CURRENCY WEAKER THAN EVER

 At the beginning of last year, Mongolians could watch Netflix for only ₮19.9 thousand per month, but as the American dollar keeps strengthening against our national currency, the monthly basic plan with ads now costs us ₮24.1 thousand.

What happened? 🔍

2022 was an extremely tough year for the tugrik. The main reasons are the weakening foreign trade balance, decreased direct investments, and depleting foreign exchange reserves…

• 5-year low: Official FX reserves dropped to $2.7 billion in August 2022, 39% less than a year ago and the lowest since November 2017.

• Much less investment: As of the Q2 of 2022, FDI in Mongolia amounted to $518 million, which is 29% less than 10 years ago.

8.65% per year...

In 2013, one American dollar was equal to ₮1,392. Since then the dollar has been strengthening against the tugrik by 8.65% each year and is now worth ₮3,454. For comparison, here’s how other currencies have annually risen against the tugrik over the past decade on average.

• Euro: 6.17%

• Yen: 5.47%

• Yuan: 7.53%

Notably, the yuan strengthened by as much as 124.6% against our currency compared to 10 years ago, reaching ₮503.

Doomed?

With investors risking an exchange loss of 8.65% per year, the weakening currency is sure to significantly decrease the inflows of foreign capital into the country. And considering a wide range of other investment risks, we are definitely not in the best situation possible in terms of attracting funds from abroad.

💸 DATA STORY

With the beginning of the new year, commercial banks in Mongolia have started paying interest on demand deposits. The average interest rate on domestic currency demand deposits of the five systemically important banks is now 5.18%. The interest rates on foreign currency demand deposits are significantly less, with the average interest rate on demand deposits in dollars of the five banks standing at 0.82%.

📉 TOP 20 INDEX FALLS 15.4% IN 2022

2022 was a rough year with rising inflation and economic instability everywhere. Here’s how major world indices and Mongolia’s TOP 20 index fared in those hard times...

S&P 500: 🔻 19.4%

The S&P 500 index (^GSPC) dropped by 19.4% last year. Looking at the factors that contributed to this outcome…

• Interest rate: The Fed raised the benchmark interest rate 7 times last year to 4.5%. As a result, interest rates of commercial banks increased, contracting the economy and causing stock prices to fall.

• Tech sector crash: Crypto scandals and supply-chain disruptions lead to a series of layoffs from companies like Microsoft, Meta, Twitter, Snapchat and many others - which, again, resulted in wavering stocks. Tesla (TSLA) alone is down 69% YoY.

The trend continues…

Mongolia’s TOP 20 index based on the market capitalization and average daily trading of top 20 securities listed on the Mongolian Stock Exchange followed suit, falling by 15.4% in 2022.

• Just like the Fed, the Bank of Mongolia raised the key policy rate 5 times last year, increasing it to 13% in December.

Among the top 20 companies, the share price of Tumen Shuvuut JSC (TUM) saw the largest decrease of 50.5%, while that of InvesCore NBFI JSC (INV) - an increase of 22%.

Hang Seng - no different

The Hang Seng Index (^HSI), a basket of 60 major Hong Kong companies, was down 15.5% in 2022, dropping to its 13-year low.

But London...

The FTSE 100 (^FTSE), an index of 100 companies with the highest market value, listed on the London Stock Exchange, rose 0.91% last year. This was mainly due to the sharp increase in the stock prices of energy and mining companies.

🏃 QUICK STORIES

📌 Mongolia exempts nationals of 32 countries from travel visa requirements. Thus, tourists coming from developed countries in Europe, Australia and New Zealand can now travel in Mongolia for up to 30 days without having to apply for an electronic visa.

📌 Mongolia’s annual inflation rate reaches 13.2% in December 2022. Compared to the previous month, this is a decrease of 1.3 percentage points. 47.6% of the 13.2% increase is mainly due to higher prices for imported goods.

📌 Prime Minister appoints new ministers and deputy ministers. The newly appointed ministers took the oath of office on January 5. The prime minister expressed his confidence that their efforts will contribute to the successful implementation of the “New Revival Policy”.

📌 Mongolian Stock Exchange to start trading on the secondary market from today. The Financial Regulatory Commission approved the beginning of secondary market trading of shares of the Mongolian Stock Exchange with the symbol "MSE".

🟦 TOP NEWS

1. Supporting Mongolia’s Democracy is Key to a Free and Open Asia-Pacific (Modern Diplomacy)

2. The 23rd Asian Physics Olympiad to be held in Mongolia (MONTSAME)

3. MIAT Mongolian Airlines Launches Codeshare With Turkish Airlines (Simply Flying)

4. Temporary Exemption from Visa Requirements for Citizens of Some Countries to Visit Mongolia (MONTSAME)

5. Aspire Mining wraps up infill drilling at Ovoot Coking Coal Project in Mongolia (Proactive Investors)