Booms come together to help Mongolia open a national bourse
Mongolia is on the verge of opening a new national stock exchange. The market will finally plug the landlocked nation into the grid of global finance, facilitating privatizations, investment and the flow of capital to would-be entrepreneurs among its three million people. And the money almost certainly will flow, says a report in The New York Times. Renaissance Capital reckons Mongolia’s economy, while small at around USD6 billion, will be the world’s fastest growing over the next five years, increasing to USD23 billion by 2013. Handling that growth will be a big challenge.
The London Stock Exchange is the front-runner among four contenders to run the new Ulaanbaatar exchange. In theory, that will allow the nation to vault overnight from markets not so different from the Naran Tuul bazaar right to electronic trading.
That should help the government start its privatization program. It is committed to handing a tenth of all proceeds to its citizenry, almost a third of which is still nomadic. Developing a modern exchange means Mongolians can receive tradeable securities in state companies with market prices. That should avoid the missteps of Eastern European nations that handed out vouchers without obvious value that were quickly accumulated by today’s oligarchs. There are also plenty of case studies that may help Mongolia manage cash inflows and their potential impact on its currency, the tugrug, and its economy.
Perhaps more by luck than judgment, Mongolia’s tardy return to the global scene may also be well timed. It is estimated to have the world’s second-biggest reserves of copper and uranium, and the 11th biggest stock of coal. Put it all together, and some eight centuries after its last big international venture, Mongolia stands to benefit from the convergence of three booms: in China, in commodities and in emerging markets.
The London Stock Exchange is the front-runner among four contenders to run the new Ulaanbaatar exchange. In theory, that will allow the nation to vault overnight from markets not so different from the Naran Tuul bazaar right to electronic trading.
That should help the government start its privatization program. It is committed to handing a tenth of all proceeds to its citizenry, almost a third of which is still nomadic. Developing a modern exchange means Mongolians can receive tradeable securities in state companies with market prices. That should avoid the missteps of Eastern European nations that handed out vouchers without obvious value that were quickly accumulated by today’s oligarchs. There are also plenty of case studies that may help Mongolia manage cash inflows and their potential impact on its currency, the tugrug, and its economy.
Perhaps more by luck than judgment, Mongolia’s tardy return to the global scene may also be well timed. It is estimated to have the world’s second-biggest reserves of copper and uranium, and the 11th biggest stock of coal. Put it all together, and some eight centuries after its last big international venture, Mongolia stands to benefit from the convergence of three booms: in China, in commodities and in emerging markets.
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