Mongolia, one of the fastest growing frontier markets
Bailey McCann, Opalesue New York:
Simon Potter is a veteran hedge fund seeder who has recently moved to Hong Kong to start a Mongolia focused fund and head up Quam Asset Management. Quam is focused both in the capital markets and wealth management, with products that are broadly involved in the Asia region. Potter was recently interviewed by Matthias Knab for Opalesque TV.
The Mongolia fund is an open ended vehicle designed to give investors liquid access to longer-term, very fast commodity driven emerging market. According to Potter, few investors have taken Mongolia seriously, but the country has a thriving economy. Prior to the launch of the Mongolia fund, the firm launched a Middle Eastern fund in partnership with InvestAD; that now acts as a sub-advisor to the fund. Quam also has a China fund that is managed from Hong Kong. The firm is also active in the private equity space and maintains a partnership with Global Alliance Partners in order to offer clients more access to deal flow an optionality in their investments.
Beyond individual funds, Quam provides a variety of services to investors including Quamnet which allows investors to look up locally based securities through a subscription based platform. The firm also manages a corporate finance division and a separate securities division which make up the bulk of the firm's activities.
Potter was drawn to creating the Mongolia fund due to the rapid growth of the Mongol economy and vast natural resources within the country itself. "Really, what we are trying to do is invest conservatively within that market and try and benefit from the major upswings that you have. So, Mongolia is actually the fastest growing market in the world for the last two years, although it has had a recent pull back, we see this as a great buying opportunity within the market where we can pick up good commodity companies, but also some local food and beverage manufacturers and distributors. We can also pick some property assets," he explains.
He notes that there is a certain level of election risk in the short term and that the political situation may always be a factor investors need to consider before getting involved, but only in the sense that elections will add to short-term swings in volatility. According to Potter, Mongolia now is much like Dubai was 15 years ago and that presents a significant opportunity.
The same is true for the firm's Middle East fund which Potter says shows a lot of upside, potential despite recent uprisings. "Our target with our Middle Eastern fund is to access the markets, but in a very fundamental way, again, so really bottom-up stock picking. We tend to focus on mid-to-small cap companies, because they are companies that you might not get access to by buying an ETF that tracks the various indices that you can track in the Middle East."
For Potter, the key to being successful in both regions is having teams on the ground who are familiar with their localities and can provide daily, updated information. This is especially true in areas where several significant projects are in the pipeline. Mongolia is to begin two large scale mining operations over the near term which will increase the country's exports into China, Potter notes.
"We expect, next year, one of the largest copper mines which is called Oyu Tolgoi run by a company called Ivanhoe and 51% owned by Rio Tinto will start to go into full production midway through 2013. {...} The second project that we expect to see listed in March of next year is Tavan Tolgoi. This is one of the largest coking coal projects in Asia." He expects that as a result of these projects, the local currency will also appreciate and begin to mature.
Watch the full interview on Opalesque TV:
Simon Potter is a veteran hedge fund seeder who has recently moved to Hong Kong to start a Mongolia focused fund and head up Quam Asset Management. Quam is focused both in the capital markets and wealth management, with products that are broadly involved in the Asia region. Potter was recently interviewed by Matthias Knab for Opalesque TV.
The Mongolia fund is an open ended vehicle designed to give investors liquid access to longer-term, very fast commodity driven emerging market. According to Potter, few investors have taken Mongolia seriously, but the country has a thriving economy. Prior to the launch of the Mongolia fund, the firm launched a Middle Eastern fund in partnership with InvestAD; that now acts as a sub-advisor to the fund. Quam also has a China fund that is managed from Hong Kong. The firm is also active in the private equity space and maintains a partnership with Global Alliance Partners in order to offer clients more access to deal flow an optionality in their investments.
Beyond individual funds, Quam provides a variety of services to investors including Quamnet which allows investors to look up locally based securities through a subscription based platform. The firm also manages a corporate finance division and a separate securities division which make up the bulk of the firm's activities.
Potter was drawn to creating the Mongolia fund due to the rapid growth of the Mongol economy and vast natural resources within the country itself. "Really, what we are trying to do is invest conservatively within that market and try and benefit from the major upswings that you have. So, Mongolia is actually the fastest growing market in the world for the last two years, although it has had a recent pull back, we see this as a great buying opportunity within the market where we can pick up good commodity companies, but also some local food and beverage manufacturers and distributors. We can also pick some property assets," he explains.
He notes that there is a certain level of election risk in the short term and that the political situation may always be a factor investors need to consider before getting involved, but only in the sense that elections will add to short-term swings in volatility. According to Potter, Mongolia now is much like Dubai was 15 years ago and that presents a significant opportunity.
The same is true for the firm's Middle East fund which Potter says shows a lot of upside, potential despite recent uprisings. "Our target with our Middle Eastern fund is to access the markets, but in a very fundamental way, again, so really bottom-up stock picking. We tend to focus on mid-to-small cap companies, because they are companies that you might not get access to by buying an ETF that tracks the various indices that you can track in the Middle East."
For Potter, the key to being successful in both regions is having teams on the ground who are familiar with their localities and can provide daily, updated information. This is especially true in areas where several significant projects are in the pipeline. Mongolia is to begin two large scale mining operations over the near term which will increase the country's exports into China, Potter notes.
"We expect, next year, one of the largest copper mines which is called Oyu Tolgoi run by a company called Ivanhoe and 51% owned by Rio Tinto will start to go into full production midway through 2013. {...} The second project that we expect to see listed in March of next year is Tavan Tolgoi. This is one of the largest coking coal projects in Asia." He expects that as a result of these projects, the local currency will also appreciate and begin to mature.
Watch the full interview on Opalesque TV:
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