Could you introduce the MSE?

The MSE was initially set up to catalyze the privatization of governmentowned assets under the former communist regime. To realize this transfer, all citizens were granted vouchers that could be converted into shares. 475 such entities were brought into the exchange. Since 2011, the MSE has been in a strategic partnership with the London Stock Exchange, which has been a reference in terms of the rules and regulations that we adhere to, and that also shares the same trading (now electronic) platform. Today, 185 companies and 2 investment funds are listed on the MSE; their total market capitalization was 10.3 trillion MNT (20% of the country’s GDP). Out of these, the finance and real estate sectors hold the highest market capitalization (6.7 trillion MNT), whereas the average market capitalization across the nine sectors we represent is around 1.1 trillion MNT. The MSE registered strong growth between 2022 and 2023. What are your expectations for the next few years?

2022 and 2023 marked a remarkable turnover period, with our market capitalization increasing threefold. Any company’s initial public offering is only the starting point. As the market’s liquidity grows, companies and enterprises will increase the quantity of shares. How did the IPO market perform this year?

We had sizeable IPOs from the finance and agriculture sector, with a total of 335.9 billion MNT raised between six companies that went public this year. Notably, Khan Bank raised 183.4 billion MNT from 29,345 investors, marking the largest IPO in the history of the exchange. How could the MSE become a more attractive platform for international investors?

What Mongolia currently lacks is international, as well as local, institutional capital. To attract institutional investors, a pension reform is essential.

Secondly, we must put forward an attractive pipeline of products to bring in international investors. The MSE will be doing a road show at the main financial centers around the world, including Shanghai, Hong Kong, and London. If in 2011, 80% of our investors were international, today, it’s majority Mongolian.

Last year, the MSE was classified as a Frontier market by the FTSE global equity indices, which will also bring more international attention. In the future, we will continue to implement more steps to upgrade our status within the FTSE classification.

The mining sector plays a crucial role in Mongolia’s economy, serving as the primary source of our country’s exports. Mongolia is currently engaged in significant large-scale mining mining projects, which are operated by both joint-stock companies and stateowned companies. Notably, jointstock companies have obtained capital from foreign stock exchanges and have subsequently established operations in Mongolia. It is important to note that these companies have not issued shares on the Mongolian Stock Exchange. Looking ahead, there is a possibility that major mining projects may consider listing their shares on the Mongolian Stock Exchange. What is the key challenge that Mongolia’s economy must overcome?

It is anticipated that the economy will experience a surge in growth, surpassing 6% by 2024-2025, due to the rise in mining production. However, it is imperative to implement reforms that encourage economic diversification to maintain this growth and establish resilience against domestic, external, and climate-related disturbances. Also, I believe there is a case for the government to privatize more assets. Could you explain to our audience the significance of the Mineral Commodities Exchange in Mongolia?

The Mongolian Stock Exchange has established a legal framework for trading in the mining product sector with the approval of the Mining Product Exchange Law. The trading of mining products on the stock exchange has facilitated the establishment of appropriate conditions for the accurate calculation of tax fees. This, in turn, will lead to an increase in revenue for the state budget, ensure the fulfillment of contractual obligations related to the supply of mining products, and mitigate risks for the parties involved in the trade. Consequently, a solid groundwork has been laid for a conducive investment environment. Furthermore, the settlements for exchange trading are conducted via Mongolian banking and financial institutions, resulting in an increase in foreign currency income, strength of exchange rates, and the creation of favorable conditions.

Since January this year, 9.4 million tons of coal and 272,2 thousand tons of iron ore concentrate traded on the Mongolian Stock Exchange with a total value of 4.3 trillion MNT.