It was a solid quarter for Mongolian assets with the key numbers pointing the right direction. Commodities continued to strengthen, especially the price of coal and gold, which are two of Mongolia´s main income earners. The Tugrik oscillated strongly but managed to post its strongest gain (+3.8%) in over four years. However it was the offshore listed stocks that posted the most impressive returns. Our core holding, Turquoise Hill Resources, rallied on the news that its controlling shareholder Rio Tinto is considering taking the company private by increasing its stake. We have long anticipated such a move, and if we see a bid it would have to come with a substantial premium in order to be accepted by minority shareholders. The company also announced that they are moving ahead with the $5.3bn expansion to more than double output at the Oyu Tolgoi mine.

On the political arena we saw some very positive moves as the Mongolian People’s Party (MPP), won the Parliamentary elections with a wide margin. It was a clear sign that Mongolian´s are feed up with populist policies, and the pro-business MPP are likely to be proactive with the infrastructure and mining projects. The World Bank expects growth to remain sluggish in 2016 due to weaker mining production but see a 2.7% growth in 2017 and 6.8% in 2018 as investments in the mining sector picks up. With this positive election it is quite likely that these estimates needs to be revised upwards… Data source: Bloomberg