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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US-China trade spat wipes $57B from top mining stocks in fortnight www.mining.com

Mining and metals stocks came in for more punishment on Tuesday as the trade spat between the US and China escalated amid a war of words between Washington and Beijing.

On Tuesday, Donald Trump threatened to impose a 10% tariff on $200 billion of Chinese goods in retaliation for what the US president called the country's "predatory" trade practices. Beijing also ratcheted up the rhetoric accusing the US of "extreme pressure and blackmailing".

Copper – used as barometer for economic prospects thanks to its widespread use in industry, transportation, power networks and construction – fell to $3.036 a pound or $6,700 a tonne, down over 8% or $600 since touching four-year highs just a fortnight ago.

Nickel, which has been immune to weakness in the sector also succumbed on Tuesday and is now trading 6% below multi-year highs hit earlier in June at $14,820 a tonne. Among industrial metals only nickel remains in positive territory for the year. Zinc down 8% year to date is the worst performer as the price declines to just above $3,000 a tonne.

Aluminum prices have given up all the gains from a sharp rise following the US imposition of sanctions on Russia and tariffs on imports from China, Europe, Canada and others.

China consumers more industrial metals and minerals than the rest of the world combined and the country imports more than two-thirds of the world's seaborne iron ore.

The import price of the steelmaking raw material declined 3% on Tuesday to $66.45 a tonne according to Metal Bulletin data. Iron ore has lost 9% of its value so far in 2018. The benchmark Australian export price of premium steelmaking coal at just below $200 a tonne is up year to date, but down sharply from levels above $250 hit in May.

Weakness on metal markets spilled over to the sector's big names with another day of across the board losses on Tuesday. The top diversified and industrial mining companies have seen a combined $57 billion wiped from their market value over the past two weeks (see chart). On a percentage basis China Molybdenum, Anglo American and Vale have fared worst.

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KPMG's audit work unacceptable, says watchdog www.bbc.com

The auditing work of one of the world's "Big Four" accounting firms has been sharply criticised by the industry's watchdog.

KPMG audits had shown an "unacceptable deterioration" and will be subject to closer supervision, the Financial Reporting Council said.

The FRC added all the Big Four - which also include PwC, EY and Deloitte - needed to reverse a decline.

KPMG said it was "disappointed" and was taking steps to improve audit quality.

Every year the watchdog reviews the audits of Britain's biggest companies to ensure they meet certain standards. The FRC noted problems at all the firms, but KPMG was singled out for the poor quality of its work.

"There has been an unacceptable deterioration in quality at one firm, KPMG," the FRC said in a statement. "50% of KPMG's FTSE 350 audits required more than just limited improvements, compared to 35% in the previous year."

Stephen Haddrill, head of the FRC, said: "At a time when public trust in business and in audit is in the spotlight, the Big Four must improve the quality of their audits and do so quickly.

"They must address urgently several factors that are vital to audit, including the level of challenge and scepticism by auditors, in particular in their bank audits. We also expect improvements in group audits and in the audit of pension balances."

He said firms "must strenuously renew" their efforts to improve audit quality to meet the legitimate expectation of investors and other stakeholders.

'Taking action'
The increased scrutiny of KPMG will involve the FRC inspecting 25% more audits done by the firm in the 2018-19 financial year, the first time the FRC has taken such action.

Michelle Hinchcliffe, head of audit at KPMG, said: "We are disappointed that our overall audit quality score for our 2016/17 audits has decreased by 4% and that the steps taken in previous years have not resulted in the necessary improvements to audit quality. We are taking action to resolve this."

KPMG came in for criticism over its audit of collapsed construction firm Carillion earlier this year, and the FRC has opened an investigation into the group under the Audit Enforcement Procedure.

The auditor was also recently fined £3.2m by the watchdog over its audit of insurance firm Quindell. Last year, the FRC opened an investigation into KPMG's audit of the accounts of aero-engine maker Rolls-Royce.

Auditors review the accounts of firms to see if the figures are a true and fair reflection of companies' financial health.

But the accounting industry has faced a lot of criticism in the last few years over whether their verdicts on companies' accounts can be trusted.

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Rajnath Singh to visit Mongolia www.businessworld.in

New Delhi, Jun 18 (PTI) Union Home Minister Rajnath Singh will embark on a two-day visit to Mongolia to strengthen India's relation with the strategically important east Asian country that shares its boundaries with China and Russia.

Singh will depart for Ulaanbaatar on June 21 after attending the International Yoga Day celebrations in Lucknow the same day, a Home Ministry spokesperson said today.

He will participate in ground breaking ceremony of an oil refinery at Ulaanbaatar on June 22, the spokesperson said, adding that the home minister will also attend a reception hosted by the Mongolian prime minister on the same day.

Singh will call upon Mongolian president the next day, the spokesperson said.

The home minister will also visit a Buddhist monastery and hold a meeting with his counterpart and Mongolia's Minister for Justice and Interior Affairs on June 23.

He will also visit the headquarters of Mongolia's Border Protection Force there before returning to the national capital on June 24.

Singh was to visit Mongolia late last year. However, the visit was postponed after he suffered a hairline fracture.

The home minister's visit is likely to further intensify the bilateral relations in various key areas.

Prime Minister Narendra Modi had in 2015 visited Mongolia, first ever visit by an Indian prime minister.

External Affairs Minister Sushma Swaraj was also in Mongolia in April this year where she discussed economic cooperation in infrastructure development, energy, services and information technology with her Mongolian counterpart.

The two countries also agreed to explore the possibility of launching direct air connectivity between New Delhi and Mongolian capital Ulaanbaatar.

Swaraj is the first Indian foreign minister to visit the resource-rich country in 42 years.

Diplomatic relations between India and Mongolia were established on December 24, 1955. India was the first country outside the then Socialist Bloc to establish diplomatic ties with Mongolia.

India had supported Mongolia in getting the United Nations and Non-Aligned Movement (NAM) berths. Both the countries also share common concern on terrorism.

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Greater Tumen Initiative countries to discuss financial cooperation www.montsame.mn

Ulaanbaatar /MONTSAME/ Ministry of Finance and the Development Bank of Mongolia are to hold a high-level discussion ‘Development Priority Programs: Financial Cooperation’ within the framework of the ‘Greater Tumen Initiative’ program, supported by the UNDP.

In particular, the Ministry of Finance and the Greater Tumen Initiative (GTI) Secretariat will jointly hold the Program Consultative Commission Meeting on June 21-22 in Ulaanbaatar and during the meeting participants will discuss about the National Investment Program, government policy and funding opportunities for priority sectors such as agriculture and mining. Over 100 representatives from Ministry of Finance and Ministry of Trade and Economy of the GTI member countries: Mongolia, People’s Republic of China, Republic of Korea and Russian Federation, executives of EXIM Bank, local authorities engaged in the program and research institutes will participate in the meeting.

Aside from representatives from the GTI member countries, discussions on the programs will involve embassies in Mongolia, international financial organizations and development partners. At the consultation meeting, issue of strengthening economic cooperation in Northeast Asia, priorities and future action plans will be discussed.

The Greater Tumen Initiative (GTI) is an intergovernmental cooperation mechanism that was founded in 1995 with the support of the United Nations Development Programme. It aims at strengthening economic cooperation, and attaining greater growth and sustainable development in Northeastern Asia.
M.Anudari

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Alaska Army Guardsmen train in Mongolia to save lives www.army.mil

FIVE HILLS TRAINING AREA, Mongolia - The typical adult human body contains five liters of blood. Responsible for transporting oxygen and nutrients to the cells and removing waste on its return trip through miles of arteries, veins and capillaries, blood is life.

Lose too much blood, and a person descends into hypovolemic shock. If more is lost, it can be fatal.

The heavy consequences of blood loss are why stopping the bleeding and saving service members' lives is serious business for Staff Sgt. Stephen Behrens, Alaska Army National Guard Medical Detachment training noncommissioned officer.

Behrens, other U.S. medical personnel and their Mongolian Armed Forces counterparts instructed Tactical Combat Casualty Care during Exercise Khaan Quest 2018 June 14-28 at Five Hills Training Area, Mongolia.

Khaan Quest is a regularly scheduled, multinational exercise co-sponsored by U.S. Pacific Command and hosted annually by the Mongolian Armed Forces. Khaan Quest 18 is the latest in a continuing series of exercises designed to promote regional peace and security. This year's exercise marks the 16th anniversary of this training event.

U.S., Mongolian Armed Forces, and 16 other nations participate this year in the Tactical Combat Casualty Care lane, just one part of a round-robin style gauntlet of training events such as crowd control and convoy operations.

Behrens said medical personnel can't be everywhere, and it is often up to service members of every job description to stabilize a wounded comrade before they can be evacuated to medical care.

"Combat casualty care is the method we use to sustain life on the battlefield, then get them from the point of injury to (higher levels of) care," Behrens said.

Central to the training is the MARCH algorithm, standing for massive bleeding, airway control, respiratory support, circulation and hypothermia prevention.

Behrens taught students to conduct a blood sweep, visually inspecting the patient for any obvious signs of bleeding before patting the wounded person down for signs that are less clear.

Most dangerous is arterial bleeding. Arteries are the blood superhighway of the vascular system, feeding crimson platelets at high pressure to smaller veins and capillaries.

Behrens said the best way to stop arterial bleeding, signified by bright-red blood, is by way of fitting a tourniquet above the wound. Students practiced with partners fitting the device, which is simply a nylon belt-like constrictive device that compresses blood vessels to stop the bleeding.

Second Lt. Sonya Hood, platoon leader for the 297th Regional Support Group contingent, winced when platoon member Pfc. Jessica Shields fitted the officer with the tourniquet, cranking the pressure on Hood's femoral artery. Behrens said Tactical Combat Casualty Care measures can be uncomfortable for the patient, but they save lives.

In a frenetic firefight, rendering medical aid to a hurt comrade becomes an exercise in pressure-cooker multi-tasking.

During a simulated movement-to-contact maneuver, Spc. Jahmoi Hodge, a squad leader under Hood's command, swept his eyes across the horizon scanning his sector. Following the tell-tale crack-crack-crack of an AK-47 rifle, Hodge dropped flat.

"Twelve o'clock, 200 meters, enemy squad in the open," Hodge called, giving direction, distance and description of the threat.

After the platoon neutralized enough of the enemy to be able to move, Hodge heard an urgent call for assistance.

"Help, help, I'm shot!," his legs covered in simulated gunshot wounds, cried U.S. Navy Hospital Corpsman 3rd Class John Bustamonte, a corpsman assigned to III Marine Expeditionary Force.

It took nearly a minute for Hodge to close the distance. The Soldier sprinted and dropped, dashed and took cover, returning fire as he rushed toward Bustamonte's urgent calls. By the time he reached the stricken Sailor, Hodge struggled to breathe fast and deep enough to fill his famished lungs.

A smoke grenade concealed Hodge's effort to render aid. Exhausted and mindful of an enemy determined to kill him, the Soldier turned his attention to the patient. A visual blood sweep indicated a severed femoral artery.

Hodge's training kicked in despite labored breathing. He cinched down the tourniquet and locked it in place.

Then the real work began.

With the help of squad member Spc. Dana Haddox, the two Soldiers hoisted Bustamonte over their shoulders and moved the Sailor out of the danger area. Despite the team effort, it was laborious work rushing the Sailor to the platoon casualty-collection point.

Once the trio reached the Casualty Collection Point, Hodge and Haddox joined forces to complete the MARCH algorithm.

Massive bleeding: The Soldiers completed a more thorough blood sweep, noting non-life-threatening venous bleeding in Bustamonte's legs.

Airway control: Though the corpsman was breathing normally, Hodge tilted his head back to ensure good airway.

Respiratory support: Since Bustamonte's wounds were only to his legs, Hodge knew he didn't need any support for a collapsed lung.

Hypothermia: Regardless of temperature, Behrens said hypothermia is always a risk for a traumatic injury. As such, Hodge wrapped Bustamonte in a space blanket.

If the scenario was real, Hodge would hand Bustamonte over to a flight medic in a medevac helicopter for evacuation to a medical facility. Though the medic has years of training to care for the wounded, Behrens said it is often non-medical service members armed with the MARCH algorithm who make a difference.

"MARCH allows us to greatly increase the survivability of traumatic injuries, and it ultimately allows Soldiers to go home alive," Behrens said.

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Northeast Asian mayors gather in Mongolia to share experience on green development www.xinhuanet.com.cn

ULAN BATOR, June 18 (Xinhua) -- The Northeast Asian Mayors' forum 2018 kicked off here Monday, with the aim of consolidating their policies on environment and green development.

Mayors from 18 cities of six countries, including Ulan Bator, Beijing, Guangzhou, Moscow, Ulan-Ude, Irkutsk, Seoul, Busan, Suwon and Tokyo as well as more than 300 representatives from international organizations are attending the two-day forum to discuss opportunities to cooperate and share experiences under a key topic "Improving air quality and reducing greenhouse gas emissions".

"Climate change is one of the inevitable and urgent global problems in the whole world. We are gathering here today to discuss ways to mitigate climate change impact, reduce greenhouse gas emissions at the city level and share experiences," Ulan Bator's mayor Sunduin Batbold said at the opening ceremony.

"Ulan Bator is severely affected by climate change. The frequency of drought and extreme wintry weather known as "dzud" has been increasing. Thousands of herders lose their animals almost to the dzud, which forces them to seek new opportunities in the capital city of Ulan Bator," the mayor said.

It has resulted in unplanned city expansion, and air and soil pollution, said Batbold.

He expressed the hope that the event will enhance partnership and cooperation of cities and introduce technologies to mitigate climate change impact, defining role and contribution of cities.

"Introducing selected technology that requires low expenses and shows result in a short time can be a good solution for development of a city," he added.

Ulan Bator initiated the Northeast Asian Mayors' Forum in 2014. Since then delegates from cities in the region gather every year to discuss environmental and socio-economic challenges and pressing issues.

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Mongolian company to export meat products to South Korea www.news.mn

‘Ochir Daginas’, a Mongolian Company is ready to export international standard meat products to South Korea. The company has signed an agreement with the South Korean Natural Core Company to export meat products.

During the opening ceremony of the ‘Ochir Daginas’ plant, officials cut a 500 meter-long sausage instead red ribbon. The company has 86 employees and 80 percent of operation is automatated. In total, the plant processes 60 different kinds of meat products. Currently, the company produces 5-6 tonnes of meat products daily.

A total of 133 companies produce meat products in Mongolia; currently, only a small number meet international standards.

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Rio Tinto to start building massive Koodaideri iron ore mine in 2019 www.mining.com

World’s second largest miner Rio Tinto (ASX, LON, NYSE:RIO) said Monday it will begin developing its Koodaideri iron ore mine in Western Australia's Pilbara region next year, highlighting parallel plans to de-bottleneck rail capacity, which should increase it to 360 million tonnes per annum (mtpa) in 2019.

The miner also said it would mine its first tonnes from the project, which it says it’s one of the world’s most technologically advanced, in 2021.

“The Koodaideri orebody is 50 kilometres long and 5 kilometres wide. It will be a new production hub which will be a key feature for the Pilbara for many years to come,” iron ore chief executive Chris Salisbury said in a presentation at Rio’s investor day.

He noted the mine would be the first one to take full advantage of automation in trucking and drilling.

Rio will begin operating its long-delayed AutoHaul robot rail system by the end of the year, which will remove the logistical bottleneck the miner faces in getting iron ore from the pit to the port.
The announcement comes on the heels of BHP’s decision to invest $2.9bn for the development of the South Flank iron ore project in the central Pilbara, which will replace depleting resources at the mining giant’s Western Australian operations and up its average grade from the region in the process.

It also follows a decision by Fortescue Metals Group (ASX:FMG) last month to go ahead with its $1.3-billion Eliwana project, also in the iron-ore rich Pilbara.

Rio also said that Pilbara sustaining capital would be about $1 billion over each of the next three years, including replacement mines at West Angelas, Robe Valley and Koodaideri, with the latter still to be formally approved.

Salisbury noted that Rio’s autonomous rail project AutoHaul was on schedule to be implemented by the end of the year, adding it was already providing benefits from an uplift in rail capacity.

“Removing our bottleneck in rail and increasing flexibility remain a key priority (…) Importantly, capacity is not the same as tonnes shipped. How we use the capacity of our integrated system will be dynamic, in line with a strict value-over-volume approach,” he said at the presentation.

Future remains rosy
Despite increased volatility and uncertainty around the globe, Salisbury said the general outlook remains solid, particularly when looking at its bigger customer — China.

Rio sees Beijing’s supply-side reforms and environmental policy improvements lifting demand for high quality iron ore.

“China's steel industry is undergoing a structural change. Removal of less efficient steel-making capacity and strong demand is supporting steel pricing and currently provides a robust backdrop for high quality iron ore,” the company said.

Rio Tinto's Australian iron ore exports guidance for 2018 remained at between 330 million and 340 million tonnes.

The price for benchmark 62% iron ore fines last traded at $68.49 a tonne, according to the Metal Bulletin.

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Mongolia's absence at UN Israel votes signals warming ties www.jpost.com

A look at Mongolia’s voting record on Israel over the last few months shows an interesting pattern – the land-locked country sandwiched between Russia and China does not, like it’s two giant neighbors, reflexively vote against Israel in the UN.

Nor does it vote for Israel or abstain. Mongolia simply does not show up to vote.

If this had happened once, then it could be chalked up to the Mongolian envoy to the UN getting tied up in traffic. The same could be true if it happened twice. But if it happens again and again then it reveals a pattern apparently born of a conscious decision, and is seen in Jerusalem as a manifestation of warming ties between Israel and Mongolia.

Mongolia – a country of just over three million people – was not in the room when the UN General Assembly passed its anti-Israel resolution on Gaza last week. It was not in the room in May when the UN Human Rights Committee in Geneva voted to establish an investigative committee into violence at the Gaza fence. And it was not in attendance in December when the General Assembly condemned the US for moving its capital to Jerusalem.

Hagai Shagrir, deputy head of the Foreign Ministry’s Asia-Pacific department, said Israel very much appreciates this pattern, and that Jerusalem is working hard to change the voting patterns in Asia.

“Mongolia is very friendly, like-minded, democratic country with whom it is important for Israel to strengthen ties,” he said. Shagrir said these friendly ties will manifest themselves in two weeks time when the two countries hold a diplomatic dialogue.

Israel does not have an embassy in Mongolia, nor does Mongolia have one in Israel, and Jerusalem’s interests in the country are represented by Israel’s ambassador in China, who travels to Mongolia three times a year.

Mongolia’s foreign minister visited Israel last August, and Z. Enkhbold – the chief of staff of President Khaltmaa Battulga – attended the AIPAC annual policy conference in Washington in March. Shagrir said, however, that Mongolia’s interests in stronger ties with Israel are not part of efforts to draw closer to the United States.

Battulga wrote a letter to President Reuven Rivlin on the occasion of Israel’s 70th anniversary earlier this year, wishing his “heartfelt congratulations” on the “historic occasion.”

“Mongolia and Israel are nations with ancient history and culture, and I am delighted to note that, presently, the cooperation between the two countries and the close relations between our two people are growing,” he wrote.

Mongolia’s interests in ties with Israel are believed to be based on three pillars.

First – as reflected in Battulga’s letter – there is a deep respect in Mongolia for a civilization that has maintained its traditions for thousands of years.

Secondly, the Mongolians have border security concerns, primarily on the Chinese border, and are interested in learning from Israel expertise about border security issues.

Finally, former US secretary of state John Kerry once referred to Mongolia as an “oasis of democracy” in a very tough neighborhood, and the Mongolians are looking to learn from the experience of Israel, which they recognize is a country very much in a similar predicament.

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Select few emerging Asian economies comfortable with Fed hikes www.reuters.com

HONG KONG (Reuters) - Higher U.S. rates are rattling many emerging markets in much the same way past tightening cycles did, but the Federal Reserve’s hawkishness could also bring cheer for a small group of Asian economies that wouldn’t mind seeing their currencies weaken.

ed rate hikes this year and the prospect of more to come have lifted Treasury yields, prompting investors to switch out of riskier emerging market debt and triggering sharp falls in their currencies.

Markets in Argentina, Brazil and Turkey took the biggest hits and in Asia, the central banks of India, Indonesia and the Philippines have raised rates and intervened to defend their currencies.

However, unlike those countries, which run current account deficits, central banks in external surplus countries and territories such as Thailand, South Korea, Taiwan and, to a lesser extent, Malaysia won’t feel compelled to keep up with the Fed’s rate hikes, analysts say.

“I don’t see those countries just being forced by the Fed into action because some of them have such enormous surpluses that they would probably be happy to see weaker currencies and capital outflows, at the margin,” said Frederic Neumann, co-head of Asian economic research at HSBC.

Weaker currencies from portfolio outflows could help lift below-target inflation and give exporters a shot in the arm at a time of heightened uncertainty over global trade and signs that the Chinese economy may be losing steam.

This week’s central bank meetings in Thailand and Taiwan are likely to reinforce that outlook, with most economists seeing at most one rate hike in Thailand, Taiwan and South Korea over the next 18 months, compared with the Fed’s five or six.

The Philippine peso PHP= lost almost 7 percent from January highs and is now trading at its lowest in 12 years. The Indian rupee INR= is near record lows having lost a similar amount, while the Indonesian rupiah IDR= is down about 5 percent after two rate hikes and heavy central bank buying.

By contrast, the Korean won KRW=, the Thai baht THB= and the Taiwan dollar TWD= are all down 3 percent from January levels close to multi-year highs while their central banks kept rates steady near record lows.

One of the reasons why the surplus economies are under less pressure is foreign investor positioning.

In deficit countries, investors tend to own shorter-term bonds, which are more liquid and less risky than longer-term debt. In countries with surpluses, investors are more comfortable holding longer-term securities.

Since the Fed started raising rates some three years ago, the premium that Indian and Indonesian short-term bonds offers over their U.S. equivalent US2YT=RR has dropped by roughly 200 basis points. In the Philippines, the premium has fallen by almost the same amount over the past 12 months.

That differential has narrowed some 200 bps in South Korea, Thailand and Taiwan as well and has even turned negative. However, investors’ greater preference for longer-term debt has helped limit downward currency pressure.

Differentials with U.S. 10-year yields shrank 100 bps or less. With the U.S. curve flattening as the economic cycle approaches its peak, that is likely to continue.

Another reason why those central banks don’t have to track the Fed is that China’s rise as a major economic power means that Asia is less synchronised with the U.S. cycle than it was before the global financial crisis.

The collapse of the Lehman Brothers in 2008 coincided with the moment when developing Asia’s trade with China surpassed the sums traded with the United States. Slowing economic momentum in China therefore may have more impact on the rate outlook in Asia than a peaking U.S. economic cycle.

“Asian economies — their synchronization with the U.S. economy has weakened because of China,” said Tan Hui, chief market strategist for Asia at J.P.Morgan Asset Management.

“It’s not easy to see many Asian central banks following the Fed.”

(This version of the story has been refiled to correct paragraph four to refer to countries and territories.)

Reporting by Marius Zaharia; Editing by Sam Holmes

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