In local terms the MSE Top 20 ended the quarter with a 9% gain but the depreciation of the Tugrik wiped out those gains. The best performing stocks in the portfolio was the mining giant Turquoise (+9%) and coal miner Tavan Tolgoi (+30%) while the laggard brokerage firm BDSec (-27%).
In 2016 the Mongolian People´s Party won a lanslide victory in the parliamentary election. It was a strong sign that Mongolians were fed up with populistic politics. MPP is a pro-business alternative and they have initiated a number of key projects to ignite growth in the economy. After a five year commodity slump, 2016 proved to be a stellar year for energy, hard and soft commodities. An environment that suits this resource rich country very well. Indeed several offshore listed mining companies did perform exepionally well with the price of coal and iron ore rallying 70% and copper by 20%. However, the local stock market had a rollercoaster year and failed to initiate a bull market and ended down 23%. The MSE is a thin market that can swiftly be moved as history has proven (+174% in 2010) but volumes remained low as both foreigners and locals were sitting on the sidelines. Small Frontier Markets are not on the radar of global investors but we belive that a small spark could trigger a sharp rally in the years to come.