FMG Mongolia Fund lost 2.8% in June
July 18 (FMG Mongolia Fund) June was an important month forMongolia as elections took place on June 28th. There were numerous headlines prior to the election but it seems the two major parties will likely form a coalition government. The Democratic Party(centre-right) won the general election with their strong democratic modernization and anti-corruption drives. However they fell short of gaining a majority in parliament, with 31 seats secured but less than the 39 required for majority. The Mongolian People’s Party (MPP) (centre-left ex-communists) won 27 seats. Both parties are concerned about development, resource sector management, economic diversification and social issues. Ideological divide between the parties is very small. Eleven parties and two coalitions contested the elections and the turnout at elections was somewhat low at just over 65% of voters.
The Mongolian Stock Exchange (MSE), announced that on July 2nd the trading hours of the exchange will span 3 hours, from 10am to 1pm. The National Statistics Office of Mongolia recently reported the strongest Q1 GDP in 10 years at 16.7% y-o-y verses9.8% one year ago. The growth was driven by the mining sector, commodity exports and government spending. Mongolia’s mineral exports, a 94% share of total exports surged 20% y-o-y while coal exports jumped +81%, iron ore +43% and crude oil +63%.
Although greater Mongolian stocks are down 45% year to date, we see the current sell off as a significant buying opportunity.
FMG Mongolia Fund lost 2.4% in May
The Fund lost 2.4% compared to the MSE Top 20 (Mongolia Top 20 index) that lost 3.7%. The performance discrepancies among the Fund’s portfolio that owns 10 names is incredible. To shed some light on the volatility seen in the Mongolian stock market, we can report that the best performing stock we own gained 5.6% during the month ( a cement producer) while the worst lost 32% (a mining company).
The Mongolian economy had its best first quarter in a decade. The economy grew in real terms by 16.7% y-o-y in the first quarter (in nominal terms GDP growth rate stood at 30.2% y-o-y). The growth is mostly driven by the mining sector, commodity exports and government spending. Industry and construction expanded 8.4% year-on-year in real terms, services 18.6%, agriculture 13.6%.
The elections are taking place on 28th June so we will report on the outcome and what this means in the next monthly update.
FMG Mongolia Fund lost 3.2% in April
The Fund started to invest its cash during the month. The model portfolio now consists of 10 stocks and the mining sector makes up about 43%, followed by consumer stocks 39%, construction 10%, finance and real estate at 4% each.
The fund has only bought MSE (domestic) listed stocks in Mongolia. The benefit of our small fund by assets is that we can establish positions among the most attractive domestic growth stories in Mongolia before larger pools of foreign money can enter the market. Mongolia grabs more and more headlines as we saw the huge mining company, Rio Tinto, take over Ivanhoe that possess huge cobber and coal mining rights in Mongolia. The Chinese have also been trying to buy Mongolian mines outright this month, but the Mongolian Government wants to retain control, at least for now.
Nobody can compete with the cost-advantage Mongolia has of being located right next door to China, the number one consumer of commodities.
Some recent examples from Mongolia:
China opens a new power plant every week where coal is the source for producing the energy.
Mongolia has 17% of the World’s supply of rare earth metals.
In Ulanbaatar one restaurant group has seen turnover increase by800% in a year!
The Mongolian government is planning to set up a new $600msovereign wealth
A Fund, to be launched in July, after the June elections have taken place, Bloomberg reported. The new fund will be used to finance pensions, Also plans to increase the size of its existing stabilization fund from $300m to $500m.
The Mongolia Stock Exchange will be modernized with the help of the London Stock Exchange team currently on the ground inUlanbaatar.
The Mongolian Stock Exchange (MSE), announced that on July 2nd the trading hours of the exchange will span 3 hours, from 10am to 1pm. The National Statistics Office of Mongolia recently reported the strongest Q1 GDP in 10 years at 16.7% y-o-y verses9.8% one year ago. The growth was driven by the mining sector, commodity exports and government spending. Mongolia’s mineral exports, a 94% share of total exports surged 20% y-o-y while coal exports jumped +81%, iron ore +43% and crude oil +63%.
Although greater Mongolian stocks are down 45% year to date, we see the current sell off as a significant buying opportunity.
FMG Mongolia Fund lost 2.4% in May
The Fund lost 2.4% compared to the MSE Top 20 (Mongolia Top 20 index) that lost 3.7%. The performance discrepancies among the Fund’s portfolio that owns 10 names is incredible. To shed some light on the volatility seen in the Mongolian stock market, we can report that the best performing stock we own gained 5.6% during the month ( a cement producer) while the worst lost 32% (a mining company).
The Mongolian economy had its best first quarter in a decade. The economy grew in real terms by 16.7% y-o-y in the first quarter (in nominal terms GDP growth rate stood at 30.2% y-o-y). The growth is mostly driven by the mining sector, commodity exports and government spending. Industry and construction expanded 8.4% year-on-year in real terms, services 18.6%, agriculture 13.6%.
Economic growth in first quarter is traditionally somewhat slow as the activities are subdued in mining, construction, agriculture and some other sectors. In 2011, the economy expanded 9.8% in 1Q and accelerated to 17.3% year-on-year by the year end.
The elections are taking place on 28th June so we will report on the outcome and what this means in the next monthly update.
FMG Mongolia Fund lost 3.2% in April
The Fund started to invest its cash during the month. The model portfolio now consists of 10 stocks and the mining sector makes up about 43%, followed by consumer stocks 39%, construction 10%, finance and real estate at 4% each.
The fund has only bought MSE (domestic) listed stocks in Mongolia. The benefit of our small fund by assets is that we can establish positions among the most attractive domestic growth stories in Mongolia before larger pools of foreign money can enter the market. Mongolia grabs more and more headlines as we saw the huge mining company, Rio Tinto, take over Ivanhoe that possess huge cobber and coal mining rights in Mongolia. The Chinese have also been trying to buy Mongolian mines outright this month, but the Mongolian Government wants to retain control, at least for now.
Nobody can compete with the cost-advantage Mongolia has of being located right next door to China, the number one consumer of commodities.
Some recent examples from Mongolia:
China opens a new power plant every week where coal is the source for producing the energy.
Mongolia has 17% of the World’s supply of rare earth metals.
In Ulanbaatar one restaurant group has seen turnover increase by800% in a year!
The Mongolian government is planning to set up a new $600msovereign wealth
A Fund, to be launched in July, after the June elections have taken place, Bloomberg reported. The new fund will be used to finance pensions, Also plans to increase the size of its existing stabilization fund from $300m to $500m.
The Mongolia Stock Exchange will be modernized with the help of the London Stock Exchange team currently on the ground inUlanbaatar.
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