The Mongolian Stock Exchange (MSE) traded mostly sideways during the quarter while the offshore listed Mongolian companies were sharply lower. The Tugrik weakened substantially after several quarters of strength.

The economy remains vibrant with GDP growth north of 5%, up from 1% last year. The country has been supported by higher commodity prices, and mining accounts for almost 80% of Mongolia´s exports. The central bank has increased its FX reserves by 260% since last year and stands now at over 3bn. The government aims to push up its economic growth rate to 8 percent in 2019.

The MSE remains a tiny stock market with limited liquidity but it is positive to see that it continues to develop. A number of companies have already been listed over the past 12 months, and the pipeline is also looking promising. In the second quarter Erdene Resources became the first ever company to cross-list its shares on Mongolian Stock Exchange as regulations recently where amended in order to attract offshore listed companies. Erdene focuses on exploration and development of gold and copper deposits in Mongolia. Even more interesting is that Mongolia is planning to bring back to life the long-delayed and massive Tavan Tolgoi project. The government supports an IPO of 30% percent of the shares in the company which has one of the world´s largest coking coal deposit used in steelmaking. This would be a huge step for Mongolia which would greatly support the case for Mongolian equities.