Tuesday, September 13 2011
Got an appropriate weighting in the tugrik? If not, now is your chance to remedy things. The Mongolian national currency was the second-best performer against the dollar last year, with a 13 per cent rise, and now those fancying a flutter may do so via the Mongolia Fund, due to be launched next month by Origo, a London-listed private equity firm.
Mongolia’s MSE Top 20 index rose by 174 per cent last year, making it the world’s best-performing stock market, but it still has a total capitalisation of only $1.6 billion. That this could easily double next year, when Ulan Bator sells a stake in the giant Tavan Tolgoi coalmine in the Gobi Desert, shows how illiquid the market is. Plans to offer free shares in the mine to every man, woman and child in this land of nomads will not change that too much.
Other risks include the fact that the only meaningful buyer of Mongolia’s commodity exports is China, while most foreign capital coming in flows straight to mining, leaving the country prone to so-called Dutch disease.
It helps to explain why admission to the fund is limited to those with at least $10,000 to spare.