1 MONGOLIA-CHINA AGREE TO COLLABORATE IN INCREASING MEAT EXPORT WWW.MONTSAME.MN PUBLISHED:2018/09/21      2 U.S. AND MONGOLIA SEEK TO STRENGTHEN ECONOMIC RELATIONSHIP WWW.STRTRADE.COM PUBLISHED:2018/09/21      3 MONGOLIA, U.S. LEADERS DISCUSS BILATERAL TIES WWW.XINHUANET.COM PUBLISHED:2018/09/21      4 BELT AND ROAD SIGNIFICANT TO MONGOLIA, PEOPLE AROUND WORLD -- ACADEMIC WWW.ENG.YIDAIYILU.GOV.CN PUBLISHED:2018/09/21      5 PETRO MATAD UPDATES MONGOLIA EXPLORATION WWW.OGJ.COM PUBLISHED:2018/09/21      6 RIO TINTO’S EXIT FROM COAL PAYS OFF, TO RETURN $3.2B FROM SALES PROCEEDS TO SHAREHOLDERS WWW.MINING.COM PUBLISHED:2018/09/21      7 OPENING CEREMONY OF SAINSHAND SALKHIN PARK HELD WWW.MONTSAME.MN PUBLISHED:2018/09/21      8 ALIBABA’S MA SAYS TRUMP’S TRADE WAR ‘DESTROYED’ HIS PROMISE TO CREATE JOBS FOR 1MN AMERICANS WWW.RT.COM  PUBLISHED:2018/09/21      9 LEGAL DISPUTE OVER EMC OWNERSHIP COMES TO AN END WWW.ZGM.MN PUBLISHED:2018/09/20      10 ERDENES TAVAN TOLGOI REVENUE SURGES DUE TO HIGHER COAL PRICES WWW.NEWS.MN PUBLISHED:2018/09/20      НУРАХ ДӨХСӨН БАЙРУУДЫГ ШИНЭЧЛЭХ КОМПАНИ ОЛДОХГҮЙ БАЙНА WWW.ZGM.MN НИЙТЭЛСЭН:2018/09/21     МОНГОЛ УЛС ВАШИНГТОН, ПЁНЬЯНЫ ХЭЛЭЛЦЭЭРТ ЗУУЧЛАХАД БЭЛЭН ГЭДГЭЭ ЗАРЛАЛАА WWW.EAGLE.MN НИЙТЭЛСЭН:2018/09/21     УЛСЫН ХЭМЖЭЭНД 85.3 МЯНГАН ТОНН ТӨМС ХУРААН АВААД БАЙНА WWW.MONTSAME.MN НИЙТЭЛСЭН:2018/09/21     ЗГ: БУЦАЛТГҮЙ ТУСЛАМЖИЙГ УСНЫ НӨӨЦИЙГ САЙЖРУУЛАХ, ХЭРЭГЛЭСЭН УСЫГ БУЦААН АШИГЛАХАД ЗАРЦУУЛНА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2018/09/21     ҮСХ: УЛААНБААТАРТ АЖИЛЛАГЧДЫН САРЫН ДУНДАЖ ЦАЛИН УЛСЫН ДУНДЖААС 121.7 МЯНГАН ТӨГРӨГӨӨР ИХ БАЙНА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2018/09/21     МОНГОЛ УЛСЫН ИХ ХУРАЛ, ЕВРОПЫН ПАРЛАМЕНТ ХООРОНДЫН XII УУЛЗАЛТААР ХАМТАРСАН МЭДЭГДЭЛ ГАРГАЛАА WWW.DNN.MN НИЙТЭЛСЭН:2018/09/21     ТӨРИЙН АЛБАНЫ УДИРДАХ АЖИЛТНЫ УЛСЫН ЗӨВЛӨГӨӨН БОЛЖ БАЙНА WWW.UNUUDUR.MN НИЙТЭЛСЭН:2018/09/21     2019 ОНЫГ МОНГОЛ, АМЕРИКИЙН ЗАЛУУЧУУДЫН ЖИЛ БОЛГОНО WWW.EAGLE.MN НИЙТЭЛСЭН:2018/09/21     УУРХАЙЧДЫН АЖЛЫН БАЙР НЭМЭГДЭЖ, ЦАЛИН ӨСЧ БАЙНА WWW.GOGO.MN НИЙТЭЛСЭН:2018/09/20     “ЭРДЭНЭТ”-ИЙН 49 ХУВИЙН ӨМЧЛӨЛ ТОЙРСОН ХУУЛЬ ЗҮЙН МАРГААН ЭЦЭС БОЛЛОО WWW.ZGM.MN НИЙТЭЛСЭН:2018/09/20    

Events

Name organizer Where
Frontier's "Invest Mongolia Tokyo 2018" Frontier Securities Tokyo Japan
"Open to Export" ICC WTO International business award ICC WTO London

NEWS

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Tributes paid to Chinggis khaan and great white banners www.montsame.mn

Ulaanbaatar /MONTSAME/ November 19 or the auspicious first day of the first month of winter, according to the Lunar Calendar marked the 855th birth anniversary of Great Chinggis Khaan, the National Pride Day and. On this occasion, ceremony for raising the state flag took place at the central square, followed by ceremony for exalting the Great White Banners.

President Kh.Battulga, Parliament Speaker M.Enkhbold and Prime Minister U.Khurelsukh paid respect to the Statue of Chinggis Khaan and the Nine White Banners during this ceremony.

The Nine White Banners were brought from to the State Palace to the central square by cavalcade of nine honor guards, who circled the State Palace clockwise. Tribute was paid to the Nine White Banners by mounted honor guards riding chestnut horses and the wind ensemble. After this, the Nine White Banners were carried back to the Ceremonial Hall of the State Palace.

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Xi’s China will only showcase illiberalism and dogma www.ft.com

The Chinese Communist party’s 19th Congress continues to shape the way we think about China, policymaking and the state of the country’s financial and capital markets.

An increasingly authoritarian China will try to make the economy and society work better, not become more liberal. It will try to engineer a harmless deleveraging, which is without precedent. Its large savings are likely to remain trapped, limiting the oft-cited internationalisation of the renminbi.

These issues matter, not least for investors because China’s $7tn equity market and its $10tn bond market are the world’s second-, and fourth-largest, respectively. Next year, Chinese A-shares will be included in the MSCI emerging markets benchmark.

Chinese bonds face bigger hurdles to inclusion in global benchmarks but some bonds are already part of lesser indices. Party cells in company management and high scores given to issuers by Chinese bond rating agencies are now on every investor’s “must find out” list.

The centralisation of power around Xi Jinping at the apex of a strengthened party — a substitute for the institutionalisation of rules, constraint and consensus — means there will be more dogma than debate in policymaking.

To oppose the president will be to oppose the party. Binary outcomes mean that, when something goes wrong, market risks will be higher and blame will lie firmly at Xi’s feet. Investors always worry about politics but concerns are greater in the absence of sound institutions.

Xi Jinping’s China will probably be the antithesis of reform and opening up. There is no sign that the government intends to address its deeply conflicted roles as owner, participant and regulator in the economy and finance. Investor interests will always be subordinate.

The recent announcement to lift the ceiling of foreign ownership of financial firms might be significant if it happened on a significant scale but the financial commanding heights will not be ceded to foreigners.

The most immediate issue, though, is financial policy. The government’s current financial crackdown and regulatory tightening is aimed at China’s debt, which is still expanding at about 14 per cent per annum and funded by increasingly short-term and volatile deposits. Financial conditions have been tightening with 10-year bond yields up by almost 2 percentage points over the past year to reach over 4 per cent, the highest for three years.

Markets expect the squeeze to continue, along with more bond defaults, and rising concerns about deteriorating debt service capacity and credit rollover risks. Zhou Xiaochuan, the outgoing head of the central bank, has warned of a “Minsky Moment” if leverage isn’t reduced.

Here is the rub, however. Slower credit expansion is leading to slower economic growth, as recent indicators confirm. Ostensibly, the party seems prepared for this as its focus shifts to inequality, social, rural development and industrial policy goals. Yet, if the government were willing to permit a proper and sustained deleveraging, it would have to accommodate much slower growth, higher unemployment, and degrees of financial and currency stress — none of which are yet present.

The central bank’s key policy rate has been raised but, at about 2.5 per cent, it is far from the 5-8 per cent seen in the tightening cycles in 2011 and 2013-14.

Monetary tightening has been modest, especially with producer price inflation running at about 7 per cent, and rising core consumer prices. All lenders and most borrowers, including the array of local government borrowing platforms, remain fully funded. The central bank continues to inject several hundred billion renminbi regularly to keep markets calm.

We need to pay attention to the December Economic Work Conference and the actions of the new Financial Stability and Development Committee. But past and current behaviour suggest that, faced with more growth volatility and downside risk, the government will again ease policy — so 2018 will be a crucial time to determine the guts of financial policy.

More generally, from behind a wall of controls on outward capital movements, China is showcasing to the world its state intervention and authoritarian model. From the other side, we can see strongly controlled capital markets, a currency against which foreigners can’t build major claims, and a limited appetite for voluntary deleveraging.

Xi Jinping’s China will have to resolve a fundamental contradiction between rising economic heft — and increasing political illiberalism — at a time of significant financial volatility.

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Alibaba goes offline with $2.9 billion stake in China's top grocer www.reuters.com

BEIJING (Reuters) - Internet giant Alibaba Group Holding Ltd (BABA.N) said on Monday it would invest HK$22.4 billion ($2.87 billion) for a major stake in China’s top hypermart operator, Sun Art Retail Group Ltd (6808.HK), part of a wider push into offline retail.

As part of an alliance with Auchan Retail S.A. [AUCH.UL] and Ruentex Group, Alibaba would buy the stake from Ruentex while Auchan Retail would boost its stake, the three companies said in a joint statement.

The alliance would target opportunities in China’s $500 billion food retail sector, as Alibaba races to build big-data capabilities in the offline retail market where roughly 85 percent of sales are made.

“Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalized services in the digital economy,” Alibaba Chief Executive Officer Daniel Zhang said in the statement.

Shares of Hong Kong-listed Sun Art, which were suspended on Nov. 13, resumed on Monday and were down 5.3 percent in morning trade, while the benchmark index .HSI was flat.

The deal would give French retailer Groupe Auchan SA, China’s Alibaba Group and Taiwanese conglomerate Ruentex 36.18 percent, 36.16 percent and 4.67 percent stakes respectively in Sun Art. Alibaba would replace Ruentex as the second-largest shareholder.

Alibaba has invested upwards of $9.3 billion in brick-and-mortar stores since 2015. It has launched many un-staffed concept shops in the past year, including grocery and coffee stores.

The $474 billion firm is taking more risks to secure offline, rural and overseas buyers as China’s urban e-commerce market shows signs of saturating, including purchasing extensive infrastructure which it had previously avoided.

“They’re getting into a territory that’s not their core strength ... for example securing a property, the licenses to sell certain products, paying tax, more labor and so on,” said Bain & Company analyst Weiwen Han.

“On one hand they really need to do it, but on the other hand they are facing a lot of challenges that they have never experienced before.”

Sun Art is China’s grocery store leader with about 8.2 percent of the market, according to data from Kantar Worldpanel.

It operates about 450 hypermarkets across China under the RT-Mart and Auchan banners. It also operates unmanned stores under the Auchan Minute brand.

It has been slow to go online, with its platform Feiniu lagging bigger players like China Resources and Wal-Mart Stores Inc (WMT.N).

In a separate statement, Sun Art said Alibaba’s Taobao China Holding Ltd would make a general offer for the company at HK$6.50 apiece.

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Toshiba to raise \600 billion from investors www3.nhk.or.jp

Struggling electronics firm Toshiba says it plans to raise 600 billion yen, or about 5.3 billion dollars, by offering shares to 60 overseas investment funds.

On Sunday, Toshiba announced the decision, which was made by its board.

The firm says the funds raised will help the company improve its financial situation and avoid being delisted from the Tokyo Stock Exchange.

Toshiba has already decided to sell its semiconductor subsidiary in order to settle the company's debts by next March and avoid the delisting.

The board came up with the new share-selling plan because there are concerns that the anti-trust assessment of the chip sale, which is now underway in the relevant countries, may not be completed in time to allow the firm to meet the March deadline.

The sales are expected to increase the volume of the company's shares by 50 percent. This could effectively undermine the current shareholders.

Regarding such concerns, Toshiba says the primary purpose of the investment is not to influence Toshiba's business operations, but rather to make a net profit.

But analysts say they will watch what the investors do with the shares they've acquired.

Toshiba's largest shareholder is Singapore-based Effissimo Capital Management, which was established by former colleagues of Japan's most famous activist investor Yoshiaki Murakami.

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Harumafuji questioned by Japan Sumo Association www.nhk.or.jp

Yokozuna grand champion Harumafuji has told sumo's governing body that he assaulted a lower-ranked wrestler.

Officials with the Japan Sumo Association questioned Harumafuji at the Ryogoku sumo arena in Tokyo on Sunday.

Harumafuji is accused of inflicting violence against Takanoiwa when they were dining out during a regional sumo tour last month. They are both from Mongolia.

Police have also questioned Harumafuji and are investigating the situation leading up to the assault.

Sources say Harumafuji admitted hitting Takanoiwa with his hands, but denied using a beer bottle.

The officials reportedly asked Harumafuji what happened before he hit Takanoiwa and how he reported the incident to his stablemaster.

Kagamiyama, a board member of the sumo association, spoke to reporters after the 2-hour session.

He declined to give details, only saying that Harumafuji had admitted assaulting the junior wrestler. He said the association will continue its investigation.

Kagamiyama also said he will interview the people who were drinking with the 2 wrestlers.

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SouthGobi Resources says CEO arrested in China www.reuters.com

(Reuters) - Coal miner SouthGobi Resources Ltd said on Friday Chairman and Chief Executive Officer Aminbuhe was arrested on Oct. 11 and detained at the Rizhao City Detention Center in China as a suspect in a fraudulent loan case.

SouthGobi's board has formed a special committee to investigate the charges against Aminbuhe, it said.

Earlier this week, the company said Aminbuhe was on leave and appointed Bing Wang as interim CEO.

A person who answered the phone at the Rizhao detention center when Reuters called on Saturday would not comment on Aminbuhe's detention.

Aminbuhe joined SouthGobi as non-executive director in August 2015 and became the CEO a month later.

Before joining SouthGobi, Aminbuhe was a director at National United Resources Holding Ltd.

Vancouver-based SouthGobi, whose primary market is China, operates its flagship coal mine in Mongolia.

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Mongolia's automotive gasoline imports increase by nearly 39 percent www.xinhuanet.com

ULAN BATOR, Nov. 17 (Xinhua) -- The volume of imports of automotive gasoline to Mongolia grew by 38.7 percent year-on-year in January-October 2017 to 210.5 million U.S. dollars, according to the National Statistics Committee of Mongolia on Friday.

Meanwhile, the import of diesel fuel increased by 90.7 percent compared to the same period in 2016, amounting to 347.9 million dollars.

As experts noted, the increase in volume of imported fuel demonstrates the activation of Mongolia's economy.

Meanwhile, the import of kerosene for the first 10 months of this year grew by 24 percent, compared to the same period last year. As a result, the total amount of imported aviation fuel was 24,800 tons.

It should be noted here that the Mongolian Parliament has increased the excise tax on imported fuel since July of this year in frames of the continuation of the implementation of IMF's Expanded Fund Facility Program in Mongolia.

According to the agreement reached with the IMF, the Parliament of Mongolia in October 2017 had to raise the excise tax on gasoline, but the Ministry of Mining and Heavy Industry of Mongolia proposed to postpone the consideration of the above-mentioned issue for uncertain term.

According to the National Statistics Committee, Mongolia imported about 94 percent of the fuel from the Russian Federation in 2016, in particular, from the Rosneft oil company.

In 2017, more than 96 percent of imported fuel was imported from Russia, and the rest from China.

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Harumafuji-funded Mongolian school damaged www.nhk.or.jp

A Mongolian charity school funded by Yokozuna sumo grand champion Harumafuji has suffered a possible act of vandalism following allegations that he assaulted another wrestler.

Residents in Mongolia's capital Ulaanbaatar say someone erased Harumafuji's name from a wall of the school, which is now under construction. The institution is scheduled to open next year.

The people say the incident occurred after Mongolian media reported on the alleged attack by Harumafuji against a lower-ranked wrestler Takanoiwa last month in Japan. Both wrestlers are from Mongolia.

A 75-year-old man who lives near the school said it is commendable that Harumafuji invested in the school's construction for children.

But he added that Harumafuji did something wrong despite his popularity and high social status.

A 57-year-old woman said she is glad that Harumafuji is helping to build the school. She said she does not believe the assault occurred because he and the other Mongolian wrestlers all have good personalities. She added that she wants people to support successful wrestlers, instead of speaking ill of them.

Harumafuji reportedly assaulted Takanoiwa while they were out drinking during a local sumo tour in the western Japanese city of Tottori last month. Sources say Harumafuji was lecturing Takanoiwa about his attitude, and lost his temper when the junior wrestler continued looking at his cellphone while he was talking.

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Fitch Revises Outlook on Mongolia to Positive; Affirms at 'B-' www.fitchratings.com

Fitch Ratings-Hong Kong-17 November 2017: Fitch Ratings has revised the Outlook on Mongolia's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Positive from Stable and affirmed the IDR at 'B-'.

A full list of rating actions is at the end of this rating action commentary.

KEY RATING DRIVERS

The revision of the Outlook to Positive reflects the following key rating drivers:

The fiscal outlook has improved considerably. Fitch forecasts the general government deficit to decline to 7.3% of GDP in 2017, above the 'B' median of 4.2%, but down from a peak of 15.9% in 2016 due to strong revenue growth and capital expenditure cuts. The 2018 budget incorporates recently approved revenue-enhancing measures and only modest expenditure increases, which Fitch believes is consistent with a further narrowing of the budget deficit to 6.5% of GDP next year. Continued adherence to fiscal targets and reforms aimed at curtailing off-budget expenditure and introducing greater independence to the budgeting process should lay a path towards a more robust and credible fiscal framework over time, but is still in a nascent development stage.

Gross general government debt (GGGD) is on a downwards trajectory. Fitch forecasts GGGD to decline to 87.5% of GDP in 2017, having peaked at 91.4% in 2016 as a result of the high budget deficit and a substantial revaluation of foreign-currency borrowings associated with a 20% depreciation of the tugrik. The agency's baseline forecasts suggest GGGD will decline to below 80% of GDP by end-2020, assuming a gradual decline in the primary deficit to 1.5%, average nominal GDP growth of 11.5%, and a broadly stable tugrik. Despite the expected improvement in public debt dynamics, GGGD/GDP will remain substantially above the 'B' category peer median of 58.5% for the foreseeable future, weighing on the sovereign ratings.

Refinancing risks have receded. Implementation of an IMF-led financing and structural reform programme following board approval in May 2017 is expected to unlock up to USD3.5 billion in new funding from multilateral and bilateral creditors over the coming years. This in turn has bolstered investor confidence and facilitated the recent issuance of an USD800 million sovereign bond, which will refinance notes previously due in 2018. The authorities also successfully issued a USD600 million bond in early 2017 to fund an exchange offer for government-guaranteed notes, following announcements that an IMF programme was under consideration. Viewed together, recent capital markets exercises have alleviated any lingering near-term external refinancing risks, having extended the sovereign's nearest external bond maturity until after 2020.

Prime Minister Khurelsukh took office in October 2017, following the ousting of the former prime minister and cabinet in a no-confidence vote in September. This political disruption led to a temporary postponement of the IMF's board meeting to discuss the first review of Mongolia's Extended Fund Facility, but this is now back on track, with the Fund having reached staff-level agreement on the first and second reviews in late-October.

The economy is recovering. Real GDP rose by 5.8% in 9M17, up from 1.2% in 2016, due to a surge in investment tied to the underground development of the Oyu Tolgoi copper mine and a rebound in exports and private consumption. Fitch forecasts real GDP to rise by 4.5% in 2018, from 4.2% in 2017, bringing Mongolia's growth performance broadly in line with the 'B' median of 4.6%. The ongoing customs bottleneck at the Mongolia-China border has triggered a sharp deceleration in coal export volumes since July 2017, from record highs in 1H17. This introduces both downside and upside risk to our forecasts, but is unlikely to derail the recovery given that coal export volumes remain well above their 2015-16 monthly average even at reduced throughput levels, and other key exports, such as copper, are only modestly impacted.

Mongolia's 'B-' Foreign-Currency IDR also reflects the following key rating drivers:

External finances remain weak despite recent improvements. Foreign reserves reached USD2.0 billion in November 2017, up from 1.3 billion at end-2016, supported by acceleration in FDI tied to large mining projects and other inflows. Fitch forecasts foreign reserve coverage will rise to 3.0x current external payments (CXR) by end-2017, up from 2.3x a year prior, but remain well below the 'B' category median of 3.8x. External interest service ratios are exceptionally high at an estimated 14.3% of CXR versus the 'B' category median of 3.5%, reflective of Mongolia's heavy reliance on external debt capital markets, although this reliance should moderate as multilateral and bilateral funding inflows increase. The country's high commodity export dependence (76% of CXR) and export concentration to China (75% of exports) also leave it vulnerable to external shocks, and constrain the ratings.

Mongolia's recent history of sporadic leadership changes increases the potential for political shocks and sharp reversals in policy, but Fitch believes these risks are somewhat muted by the Mongolian People's Party overwhelming parliamentary majority ahead of elections in mid-2020. The more immediate risk, in the agency's view, is that stronger macro performance and the resurgence in external inflows dilute the authorities' drive and commitment to adhere to IMF reform targets.

Overall capital adequacy of the Mongolian banking system should become clearer as a result of an ongoing asset-quality review being conducted as part of the IMF programme. Bank of Mongolia will start its supervisory review in December by applying its own two-year stress testing on individual banks and engaging with them to identify and rectify any potential capital shortfalls. The IMF has estimated bank capital needs could amount to 7% of GDP (15% of system-wide loans), from which up to 3.5% of GDP has been earmarked from public funds as a contingency. While the deployment of public funds for banking-sector recapitalisation would be a potential set-back to recent fiscal improvements, Fitch does not believe the estimated amount would pose a material funding constraint to the sovereign, nor is it sufficient in size to offset other positive developments across Mongolia's sovereign credit profile.

Structural factors such as GDP per capita, governance indicators, and doing business rankings score above 'B' category peers and provide continued support to the rating. Mongolia's small population of roughly 3 million also suggests per capita incomes have the potential to rise dramatically over the longer term if the country can successfully harness its general natural resources endowments through strategic projects such as Oyu Tolgoi and Tavan Tolgoi, and deliver them more reliably via planned rail and other infrastructure connectivity enhancements.

SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)
Fitch's proprietary SRM assigns Mongolia a score equivalent to a rating of 'B' on the Long-Term Foreign-Currency IDR scale.

Fitch's sovereign rating committee adjusted the output from the SRM to arrive at the final Long-Term Foreign-Currency IDR by applying its QO, relative to rated peers, as follows:
- External Finances: -1 notch, to reflect repeated bouts of external financing stress.

Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a Long-Term Foreign-Currency IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within our criteria that are not fully quantifiable and/or not fully reflected in the SRM.

RATING SENSITIVITIES
The main factors that could lead to positive rating action, individually or collectively, are:
- Continued implementation of credible and coherent macroeconomic policy-making that improves Mongolia's basic economic stability.
- A track record of meeting stated fiscal targets, contributing to an improved outlook for government debt ratios.
- Evidence of substantial improvement in the country's external liquidity position, for example through a build-up of foreign reserves.

The main factors that could lead to negative action, individually or collectively, are:
- Failure to remain current on IMF programme guidelines, which could heighten external financing risks.
- Emergence of systemic financial stress.
- Failure to maintain the GGGD/GDP ratio on a downward trajectory.

KEY ASSUMPTIONS
- IMF staff-level agreement on the first and second reviews receives board approval.
- Customs bottleneck at Mongolia-China border does not deteriorate any further.

The full list of rating actions is as follows:

Long-Term Foreign-Currency IDR affirmed at 'B-'; Outlook Revised to Positive from Stable
Long-Term Local-Currency IDR affirmed at 'B-'; Outlook Revised to Positive from Stable
Short-Term Foreign-Currency IDR affirmed at 'B'
Short-Term Local-Currency IDR affirmed at 'B'
Country Ceiling affirmed at 'B-'
Issue ratings on long-term senior unsecured foreign-currency bonds affirmed at 'B-'

Contact:

Primary Analyst
Andrew Fennell
Director
+852 2263 9925
Fitch (Hong Kong) Limited
19/F Man Yee Building
68 Des Voeux Road Central
Hong Kong

Secondary Analyst
Stephen Schwartz
Senior Director
+852 2263 9938

Committee Chairperson
Tony Stringer
Managing Director
+44 20 3530 1219

Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com; Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com.

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Norway's state fund 'needs to drop oil and gas investments' www.bbc.com

Norway's government has been told its state-run fund should drop its investments in oil and gas stocks.

Norges Bank manages Norway's $1 trillion (£758bn) sovereign wealth fund on behalf of the government.
It said the step would make the country "less vulnerable to a permanent drop in oil and gas prices", and its advice was not based on a price forecast or the sector's sustainability.
Around 6% of the fund, worth £28bn, is invested in oil and gas stocks.
"This advice is based exclusively on financial arguments and analyses of the government's total oil and gas exposure," said the bank's deputy governor Egil Matsen.
Norges Bank's proposal must now be reviewed by Norway's Finance Ministry, which has said it will announce its own view in the autumn of next year.
If it decides to back the central bank's proposal, the country's parliament would be able to vote on it in June 2019 at the earliest.
Norway is western Europe's biggest oil and gas producer and its sovereign wealth fund, known officially as the Government Pension Fund, is used to invest the proceeds of the country's oil industry.
But Norges Bank said that investing money back into the energy sector meant the government's exposure to the price of crude was too high, particularly given the country's majority stakes in Statoil ASA.
"There is a substantial difference... in return between the oil and gas sector and the broad stock market in periods when the oil price changes substantially.
"Oil price exposure of the government's wealth position can be reduced by not having the fund invested in oil and gas stocks," Mr Matsen said.
'No cause for concern'
Nonetheless, shares in major oil firms such as Shell, BP and Exxon Mobil all traded lower after the announcement.
And analysts warned that the central bank's proposal could have a knock-on effect on the sector.
"The risk for the oil sector is how many investment funds will downsize their exposure to extractive industries," said Jason Kenney, oil analyst at bank Santander.
But Quilter Cheviot analyst Liz Dhillon said the move was "no real cause for concern".
"Nothing is imminent and even if the advice is fully implemented we believe this will have limited impact on the oil and gas producers, as the holdings of Norges Bank are relatively small and no doubt will be disposed of over an extended time frame," she added.

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