JUNE 2013 - FEAS

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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013 MOLDOVA STOCK EXCHANGE ECONOMIC OUTLOOK In 2012, GDP, measured in current prices, was US$ 7282 million, with 0,8% lower than in 2011. The reduction of GDP was influenced by the decrease of the external demand for goods produced in Moldova and by the weakening of the domestic final consumption account. The annual inflation rate in December 2012, compared with December 2011 was 4,1%. For 2012 exports and imports increased with 2,3% and 2,5% compared with 2011. For 2013-2016 GDP is expected to grow for 4,5% - 5% per year. For 2013 the World Bank predicts an economic growth for Republic of Moldova of 3,1%. In March, 2012, the important event on the political scene of Republic of Moldova was the presidential elections and Nicolae Timofti was elected. This fact ended the 2,5 years political crises. Key Information Contacts Government of the Republic of Moldova www.gov.md Ministry of Economy www.mec.gov.md Public Property Agency www.app.gov.md National Bank of Moldova www.bnm.org National Commission of Financial Market www.cnpf.md Chamber of Commerce and Industry www.chamber.md National Bureau of Statistics www.statistica.md CONTACT INFORMATION Contact Name Ms. Valeria Gaina E-mail valeria@moldse.md Website www.moldse.md PAGE 66
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013 MONGOLIAN STOCK EXCHANGE We are focusing on creating a favorable legal environment and better regulation in the capital markets. Altai Khangai Acting Chief Executive Office We would like to express our warm greetings and best wishes to all of you on the occasion of the 20th anniversary of Mongolian Stock Exchange. During the last 20 years MSE has encountered several challenging years, as well as, even more years of accomplishments. In total, 474 Joint stock companies have been listed on MSE with the stock trading value reaching 262.5 bln MNT, while values of Government and Corporate bond trading reached 215.1 bln MNT respectively. The number of Broker-Dealer companies with special licenses to operate in the Securities market reached 45, and they are currently servicing about 450,000 individual investors and clients. Total dividend distribution has reached 109.6 bln MNT. Mongolian Government is increasingly recognizing the importance of the capital markets in development of the national economy and focusing on its expansion. We would like to emphasize on the initiative to distribute shares of “Erdenes Tavan Tolgoi” JSC, the holder of massive coking coal deposit, to all citizens of Mongolia and to local private entities, and believe that conducting openmarket trading of its shares will accelerate the growth of the capital markets in Mongolia and will be a crucial point of its development. In the recent years, the Parliament and Government of Mongolia has issued number of important policy documents on development and improvement of current legal environment in the capital market. In order to modernize in compliance with international standards and to enhance the development of the capital markets, the Securities Law is being re-drafted and will soon be submitted to the Parliament. In 2009, the Financial Regulatory Committee of Mongolia has issued “Prime Objectives of the Stock Market Development Program in 2009- 2012”. We are focusing on engaging internationally recognized consultants and institutions in processing the draft of applicable rules and regulations as well as drafting of laws. Consequently, this will create a favorable legal environment and better regulation in the capital markets. In December of 2010, the State Property Committee of Mongolia has signed a longterm Strategic Partnership Agreement with London Stock Exchange Group (LSEG) to restructure and develop the Mongolian Stock Exchange. Based on the agreement, LSEG will cooperate with MSE at the administrative and managerial levels and address the issues that require immediate attention. There is an absolute necessity to create a favorable legal framework for capital markets, improve the market infrastructure and introduce a worldclass trading platform to upgrade MSE and the clearing, settlement depositary system in line with international standards. It has also become essential to increase domestic capital investment and the competitiveness of the capital market, to enhance liquidity in the market, to protect the interests of investors, to mitigate the non-market risks, as well as, to improve the human resource productivity. We would like to thank and wish happiness, health and prosperity to all individual and institutional investors, professional organizations and issuers for your input in the development of capital markets in Mongolia. HISTORY AND DEVELOPMENT Mongolian Stock Exchange was established on January 18th of 1991, as the official and only stock exchange of Mongolia, and throughout this relatively brief history, the exchange was able to achieve remarkable growth in tandem with the robust economic performance of Mongolia. MSE serves the domestic cash equity market with 366 listed companies and a market capitalization of 1.373 trillion tugriks (US$ 1.07 billion) as on December 31, 2010. On September 17, 2010, Mongolian Stock Exchange has conducted Government Bond trading worth 30.0 billion tugriks consisting of 3,000 pieces of ordinary Government Bond. In December 2010, Mongolian Stock Exchange has concluded Strategic Partnership Agreement with London Stock Exchange. MSE has concluded MoU on Cooperation with 8 Stock Exchanges in the world, such as Tokyo Stock Exchange, Korea Exchange etc. Also, Mongolian Stock Exchange is a member of two stock exchange associations, namely, it is a member of Federation of Euroasian Stock Exchanges and Asia and Oceania Stock Exchange Federation. FUTURE OUTLOOK In 2011 MSE will: • Increase institutional participation • Attract more foreign investors • Enhance the quality of market intermediation • Strengthen the equity and debt markets • Conduct privatization of state assets • Invest in the social infrastructure • Develop human resources and; • Promote the implementation of international best practices • Seek to introduce new financial product on the Stock Exchange CAPITAL MARKET DEVELOPMENT AND ECONOMIC OUTLOOK Political Outlook The outlook for the domestic political scene is stable, and the president, Elbegdorj Tsakhia and, prime minister, Batbold Sukhbaatar will maintain the Mongolia’s relatively liberal social and economic policies, as well as its multilateral foreign policy stance. Mongolia’s foreign policy will continue to be based on its close relationship with its two neighbors, Russia and China, as well and developing close relationship with its “Third Neighbors”, the US, Japan and Western Countries. These ties have been strengthened by a series of bilateral visits with the Russia, China and Japan and other countries. Mongolia has also signed agreement on setting up state owned JV of Mongolia and Russia, Dornod Uran” to extract and mine uranium resources. Mongolia also has significant presence of Western capital in the form of investment by Ivanhoe Mines and PAGE 67
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