JUNE 2013 - FEAS
JUNE 2013 - FEAS
JUNE 2013 - FEAS
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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT <strong>JUNE</strong> <strong>2013</strong><br />
MONGOLIAN STOCK EXCHANGE<br />
Rio Tinto in its massive Oyu Tolgoi copper and<br />
gold project in South Gobi region.<br />
There are no immediate threats in North East<br />
Asian region, which Mongolia is located, except<br />
an issue of North Korea.<br />
Mongolian peacekeepers also participate<br />
actively in international peacekeeping efforts<br />
in such countries as Chad and Sudan, as well<br />
as participating in military operations of US-led<br />
coalition in Iraq and Afghanistan.<br />
As well as seeking close relationship with its<br />
two neighbors, Russia and China, Mongolia<br />
will seek to have balance by developing close<br />
strategic relationships with US, Japan and EU.<br />
Taking notice of its overreliance from China on<br />
exports of commodities, Mongolian Government<br />
will seek to build a new railroad route to reach<br />
markets of Japan and South Korea via Russia.<br />
Economic Performance<br />
Mongolian economy expected to have grown<br />
at a rate of 8% in 2010 and as of September<br />
2010 Industrial production grew at annual rate of<br />
15%. According to Bank of Mongolia, Mongolian<br />
Official Foreign Currency Reserve hit US$ 2<br />
billion US$ at the end of 2010.<br />
In 2010 Mongolia made a foreign trade with<br />
132 countries of the world and total foreign<br />
trade turnover reached 6177.1 million US$, from<br />
which export stood at 2899.2 million US$ and<br />
imports at 3277.9 million US$. The total foreign<br />
trade turnover increased by 53.5% and exports<br />
increased by 53.8% and imports increased by<br />
53.3% respectively.<br />
Total number of unemployed people who<br />
registered with relevant authorities as of end of<br />
December 2010 stood at 38.3 thousand people.<br />
Consumer price index has increased by 13.0%<br />
compared to the same period last year in<br />
December 2010. The average yearly inflation<br />
rate was at 10.1%.<br />
In 2010 Government of Mongolian began to<br />
hand out 10,000 tugriks to each citizen every<br />
month and beginning from January 1, 2011<br />
it will hand out 21,000 tugriks to each citizen,<br />
which will boost domestic consumption.<br />
Mongolian National Tugrik (MNT) was the best<br />
performing currency of the world in 2010 and<br />
it appreciated by 16% and stood at 1,257.18<br />
against a US$. The authorities also agreed<br />
to allow greater exchange rate flexibility, to<br />
strengthen the fragile banking system, and<br />
to improve the targeting of social spending.<br />
Investment in mining has increased a lot.<br />
The outlook of economy in 2011 looks very<br />
bright and Mongolian economy is expected to<br />
grow by 12% in 2011 according to a forecast by<br />
Economic Intelligence Unit. Cash handouts to<br />
citizens will increase domestic consumption, but<br />
will also push inflation higher.<br />
As for copper, the price is projected to remain<br />
at high levels (more than 9,000 US$ per ton)<br />
during the forecast period, which will stimulate<br />
production. In 2010 coal became the largest<br />
export commodity in terms of value and it is<br />
expected to remain same in 2011.<br />
Prospects for development of new mines<br />
brightened considerably in October 2009,<br />
when the government signed an agreement<br />
with an international mining company to exploit<br />
the Oyu Tolgoi copper and gold deposit.<br />
Investment in this project is expected to total<br />
US$ 6 billion production is projected to start in<br />
<strong>2013</strong>. The long-awaited Oyu Tolgoi agreement<br />
and subsequent construction will raise investor<br />
confidence and have knock-on effects on other<br />
parts of the economy.<br />
Moreover, the government is considering<br />
proposals to mine the large Tavan Tolgoi coal<br />
deposit with international partners and distribute<br />
share vouchers after organizing it as Joint Stock<br />
Company. The valuation of Tavan Tolgoi deposit<br />
by international experts range from 30-40 billion<br />
US$ and it has 6.5 billion tonnes of coal reserve.<br />
FDI inflows into mining are expected to rise<br />
significantly over the forecast period.<br />
Investment is expected to increase further,<br />
driven by Oyu Tolgoi. Also, Mongolian<br />
Government is planning to build a railroad from<br />
Tavan tolgoi deposit to Russia via Gobi Desert<br />
and Eastern Mongolia with a plan to transport<br />
it to Russian Pacific ocean ports to Japan and<br />
South Korea.<br />
Moreover, after abolishment of 68% Windfall<br />
Profits Tax on gold and copper takes its effect<br />
beginning from January 1, 2011, the gold sold<br />
to Central Bank and related tax revenue is likely<br />
to increase, because gold industry will come out<br />
of shadow.<br />
Also, uranium mining and extraction is likely<br />
start in 2011.<br />
Information obtained from the Exchange.<br />
Key Information Contacts<br />
National Statistics Office www.nso.mn<br />
Bank of Mongolia www.mongolbank.mn<br />
National Development and Innovation Committee www.ndic.gov.mn<br />
CONTACT INFORMATION<br />
Contact Name Ms. D. Enkhzul E-mail enkhzul@mse.mn Website www.mse.mn<br />
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