Mongolia top 2010 currency, then Australia
Emerging Asian stock markets have outperformed their western counterparts with this year's stellar performance going to the world's smallest stock exchange - that of Mongolia. The country also had this year's best performing currency, with the Australian dollar coming in second.
WERDEN: The local currency in Mongolia is the tugrik and its value rose 15 per cent this year because of a mining boom in the country.
The Australian dollar rose 13 per cent, making it the second best performing currency in the world this year. Both Mongolia and Australia are resource rich and Commonwealth Bank economist, Craig James, says the key feature of their success is China.
JAMES: Both countries are really dependent on China in terms of commodities, whether it's coal, gold, raw materials more generally and the strength of the Chinese economy, the rise of commodity prices, meaning these two economies Mongolia and Australia are benefiting.
WERDEN [TO JAMES]: And the fact the US dollar is sliding - has that also helped?
JAMES: In terms of currency strength, you've always got to look at it in terms of the individual countries, but you've also got to look at it in terms of the US dollar as well and the US economy has been soft this year, it's meant that investors have been moving away from the US dollar and moving to other currencies, so the fact that currencies like the Mongolian tugrik and the Australian dollar have risen this year owe some of their strength in part to the weakness of the Greenback [US dollar], but at the other end of the scale, we have to look at the individual strength of the two countries. What is important is the Mongolian tugrik is number one, the strongest performing currency in the world in 2010 and the Australian dollar is number two, it's quite interesting the third strongest currency this year is the Japanese yen. Again, I think the strength of the Japanese yen owes in large part its trade links with China rather than anything else.
WERDEN: The Mongolian Stock Exchange also performed well this year again largely because of resources, the value of mining shares rising between 100 and 700 per cent. Nick Saijrakh from Mongolian investor firm, Asia Pacific Securities, says the country's success is directly related to the Mongolian government's decision to strike a deal with the large multinational miners to develop the country's - and one of the world's largest - gold and copper deposits. As a result, Nick Saijrakh says foreign funds have been pouring in along with mining support industries and other benefits that follow, like community infrastructure.
SAIJRAKH: Besides that, the Mongolian government passed a law to have all transactions [done] in Mongolian currency so whatever happens in Mongolia all the transactions have to be made in Mongolian currency hence the currency standing increasing. And on top of that, banks, even though in 2009 Mongolia's two largest banks went bankrupt, the rest of the banks this year started giving out 16.8 per cent for term deposits in Mongolian currency and that drew a lot of foreign money as well coming into Mongolia.
WERDEN: Sri Lanka's stock exchange has also done well because of a booming IT sector. The Thai and Indonesian stock markets also performed well, driven by demand from China. While it is full steam ahead, James Thier from Australia's Ethical Investment fund management company says there are concerns that these emerging markets - Mongolia's in particular - will be exploited.
THIER: There are also issues in regard to indigenous populations in what are undoubtedly lesser environmental standards in those countries, so there could be some considerable damage in regard to the environment and there are also issues of transparency and what is happening in those countries and the companies that are operating in those countries, in regard to pay rates and a whole range of areas. This is not unusual in developing countries, the developed world often does take advantage in some cases, it's also beneficial clearly in terms of economic growth, but economic growth is not the sole or primary driver that should be taken into account.
WERDEN: The challenge for these emerging markets in 2011 and beyond will be how they balance social equality with more profit.
WERDEN: The local currency in Mongolia is the tugrik and its value rose 15 per cent this year because of a mining boom in the country.
The Australian dollar rose 13 per cent, making it the second best performing currency in the world this year. Both Mongolia and Australia are resource rich and Commonwealth Bank economist, Craig James, says the key feature of their success is China.
JAMES: Both countries are really dependent on China in terms of commodities, whether it's coal, gold, raw materials more generally and the strength of the Chinese economy, the rise of commodity prices, meaning these two economies Mongolia and Australia are benefiting.
WERDEN [TO JAMES]: And the fact the US dollar is sliding - has that also helped?
JAMES: In terms of currency strength, you've always got to look at it in terms of the individual countries, but you've also got to look at it in terms of the US dollar as well and the US economy has been soft this year, it's meant that investors have been moving away from the US dollar and moving to other currencies, so the fact that currencies like the Mongolian tugrik and the Australian dollar have risen this year owe some of their strength in part to the weakness of the Greenback [US dollar], but at the other end of the scale, we have to look at the individual strength of the two countries. What is important is the Mongolian tugrik is number one, the strongest performing currency in the world in 2010 and the Australian dollar is number two, it's quite interesting the third strongest currency this year is the Japanese yen. Again, I think the strength of the Japanese yen owes in large part its trade links with China rather than anything else.
WERDEN: The Mongolian Stock Exchange also performed well this year again largely because of resources, the value of mining shares rising between 100 and 700 per cent. Nick Saijrakh from Mongolian investor firm, Asia Pacific Securities, says the country's success is directly related to the Mongolian government's decision to strike a deal with the large multinational miners to develop the country's - and one of the world's largest - gold and copper deposits. As a result, Nick Saijrakh says foreign funds have been pouring in along with mining support industries and other benefits that follow, like community infrastructure.
SAIJRAKH: Besides that, the Mongolian government passed a law to have all transactions [done] in Mongolian currency so whatever happens in Mongolia all the transactions have to be made in Mongolian currency hence the currency standing increasing. And on top of that, banks, even though in 2009 Mongolia's two largest banks went bankrupt, the rest of the banks this year started giving out 16.8 per cent for term deposits in Mongolian currency and that drew a lot of foreign money as well coming into Mongolia.
WERDEN: Sri Lanka's stock exchange has also done well because of a booming IT sector. The Thai and Indonesian stock markets also performed well, driven by demand from China. While it is full steam ahead, James Thier from Australia's Ethical Investment fund management company says there are concerns that these emerging markets - Mongolia's in particular - will be exploited.
THIER: There are also issues in regard to indigenous populations in what are undoubtedly lesser environmental standards in those countries, so there could be some considerable damage in regard to the environment and there are also issues of transparency and what is happening in those countries and the companies that are operating in those countries, in regard to pay rates and a whole range of areas. This is not unusual in developing countries, the developed world often does take advantage in some cases, it's also beneficial clearly in terms of economic growth, but economic growth is not the sole or primary driver that should be taken into account.
WERDEN: The challenge for these emerging markets in 2011 and beyond will be how they balance social equality with more profit.
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