Cryptocurrency investors could lose everything, warns Deutsche Bank www.rt.com

Bitcoin investors should remember issues like high volatility, possible price manipulation and data loss or data theft, according to Markus Mueller, global head of the Chief Investment Office at Deutsche Asset Management.

Davos participants eye Belt and Road in pursuing a shared future www.chinadaily.com.cn

DAVOS - Participants of the Davos World Economic Forum (WEF) annual meeting, which closed Friday, have turned to the Belt and Road Initiative for cures for the fractured world and to create a shared future.

They expected the initiative to tie together the destiny of people living in different countries and regions through further specific actions to promote connectivity, improve living standards, boost free trade, among others.

Proposed by Chinese President Xi Jinping in 2013, the Belt and Road Initiative is aimed at promoting the connectivity of Asian, European and African continents and their adjacent seas and realizing diversified, independent, balanced and sustainable development in the countries involved.

Wide support

Embracing the spirit of peace and cooperation, openness and inclusiveness, mutual learning and mutual benefit, the initiative has gained support from more than 100 countries and international organizations.

"The Belt and Road is the best place to start working on the fractures in the world and creating connectivity," Pakistani Prime Minister Shahid Khaqan Abbasi said in a panel discussion.

He said the Belt and Road can link countries and create shared prosperity, which coincides with the theme of this year's gathering -- creating a shared future in a fractured world.

"We feel that something concerning the fractured world is discussed in Davos, Belt and Road is probably the best way to address this," said Kirill Dmitriev, chief executive of the Russian Direct Investment Fund, Russia's sovereign wealth fund with a reserved capital of $10 billion.

Chan Chun Sing, Singapore's minister in Prime Minister's Office, said the impact of the Belt and Road Initiative is threefold. Firstly, it connects markets, facilitates trade and improves people's livelihoods. Secondly, it catalyses local economies. Thirdly, it sets a system for the global economy.

Mutually beneficial projects

With regard to specific projects under the framework of the Belt and Road Initiative, Abbasi said China-Pakistan Economic Corridor is a "visible part."8 Dmitriev said that from the Russian point of view, the time cost of cross-border transportation of goods has been markedly reduced thanks to the completion of a bridge linking China's Tongjiang city in the northeastern Heilongjiang province and the Russian town of Nizhneleninskoye.

Calling for "significant collaboration," US businessman Michael Burke said: "The size and scale of infrastructure projects along the Belt and Road cannot be done by any one country, neither private sector alone or public sector alone."

Burke is the chairman and chief executive officer of AECOM, an American firm which designs, builds, finances and operates infrastructure assets in more than 150 countries and regions.

Burke said his company has been involved in the Belt and Road Initiative, collaborating with state-owned enterprises in various countries in an effort to combine "their expertise together with our private expertise."

Guiding strategy

As regards the strategy of investing in infrastructure along the Belt and Road, Jin Liqun, president of the Asian Infrastructure Investment Bank (AIIB), an international lender created by China that has attracted 84 members so far, laid out three basic criteria -- financial sustainability, environment impact and local support.

"We would be very much willing to consider any projects proposed by member countries, but we have to look at the basic requirements of those proposed projects." Jin said.

Jin said the AIIB would finance infrastructure projects in ways that will neither "leave a big footprint" on the environment, nor create problems for local communities.

In addition to infrastructure projects, WEF participants were also interested in seeing the Belt and Road Initiative play a more prominent role in strengthening financial collaboration among relevant countries.

"Growing collaboration in the financial and investment sphere is an integral part of this cross-linking of integration initiatives," said Sergey Gorkov, chairman of Russia's Vnesheconombank, a state-owned development bank

The integration of the Belt and Road Initiative and the Eurasian Economic Union will tap the potential of national, regional as well as international development institutions operating in the Eurasian region, he added.

Proposed by Russian President Vladimir Putin in 2014 to draw closer economic ties among former republics of the Soviet Union, the Eurasian Economic Union is a regional cooperation mechanism that includes Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia.

China warns investors over risks in overseas virtual currency trading www.chinadaily.com.cn

BEIJING - A leading Chinese Internet finance guild has warned domestic investors about risks in trading overseas "initial coin offerings" (ICOs) and virtual currency transactions.

Moody's publishes FAQ on Mongolia's growth potential, liquidity and fiscal metrics www.moodys.com

Singapore, January 29, 2018 -- Moody's Investors Service ("Moody's") says that the Government of Mongolia's (B3 stable) medium-term growth potential is backed by its abundant mineral resources, demand for which is expected to remain solid. A recent debt refinancing has coincided with an improvement in external metrics to alleviate liquidity and external pressures, albeit from high levels. Sustained adherence to IMF rules designed to improve accountability and tighten the budgetary process would distinguish the current improvements in credit metrics from previous boom-bust cycles. However, at the current juncture and in the next few years, Mongolia's credit metrics will remain vulnerable to commodity price cycles.

Moody's conclusions are contained in its just-released report, "Government of Mongolia: FAQ on medium-term prospects for growth, liquidity and fiscal strength".

Moody's report answers the three questions below:

1. What are Mongolia's medium-term growth prospects?

2. Does the recent refinancing eliminate external liquidity risks?

3. What is the outlook for Mongolia's fiscal metrics in light of implemented and planned reforms?

Moody's says that Mongolia's GDP growth will be strong over the medium term, rising towards 7.0% by 2021, backed by demand for its natural resources. Consumption of coal and copper, both key exports for Mongolia, is likely to remain robust, given structural changes in the market, such as those associated with urbanization and the electrification of transport in China. However, risks to growth stem from a very high reliance on China as a destination for its exports and source of investment, as well as lack of predictability on the regulatory environment which can weigh on investment.

Moody's also notes that last October's debt refinancing alleviates liquidity pressures. Combined with a narrower current account deficit and higher investment inflows from both FDI and multilateral support, the refinancing has also reduced pressures on the country's foreign exchange reserves.

However, both liquidity risks and external vulnerability remain key constraints to the credit profile. Moody's estimates that external debt obligations due over the next year are still around 1.5 times larger than foreign exchange reserves, underscoring the prominence of external risks.

In light of implemented and planned reforms, Moody's now forecasts Mongolia's deficits to narrow faster than expected at the start of 2017, reflecting stronger headline GDP and revenue growth supported by the mining sector. This is leading to a gradual moderation in the country's debt burden. Still, government debt at around 81% of GDP in 2018 is high for an economy of the size and income levels of Mongolia's.

Thus, a sustained observance to structural reforms developped under the IMF program is crucial for credit quality because these reforms are designed to prevent a return to boom-bust cycles, that Mongolia has tended to be vulnerable to in the past.

Subscribers can read the full report at:

http://www.moodys.com/researchdocumentcontentpage.aspx…

NOTE TO JOURNALISTS ONLY: For more information, please call one of our global press information hotlines: New York +1-212-553-0376, London +44-20-7772-5456, Tokyo +813-5408-4110, Hong Kong +852-3758-1350, Sydney +61-2-9270-8141, Mexico City 001-888-779-5833, São Paulo 0800-891-2518, or Buenos Aires 0800-666-3506. You can also email us at mediarelations@moodys.com or visit our web site at www.moodys.com.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Anushka Shah
Asst Vice President - Analyst
Sovereign Risk Group
Moody's Investors Service Singapore Pte. Ltd.
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Marie Diron
MD - Sovereign Risk
Sovereign Risk Group
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Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
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Iran reportedly considers meat import from Mongolia www.akipress.com

An Iranian official unveiled plans for importing red meat from some neighboring countries, as well as from Mongolia, according to Deputy Agriculture Minister of Iran Ali Akbar Mehrfard.

China’s coal imports from Mongolia surge www.news.mn

According to customs data released on Thursday, China’s coal imports from Russia and Mongolia soared in 2017 as the two countries filled a supply gap caused by trade sanctions on North Korea.

Robert Friedland tells Frank Holmes why copper is ready to run www.mining.com

Last week the U.S. Global Investors office was visited by a living legend in the junior mining industry, billionaire founder and executive chairman of Ivanhoe Mines, Robert Friedland. In case you don’t know, back in the mid-1970s, Robert was caretaker of an apple orchard south of Portland that one of his buddies from Reed College would often visit. That buddy’s name was Steve Jobs, who later went on to found a little company he named—what else?—Apple.

Before Robert and Steve Jobs began palling around, Jobs was known as shy and withdrawn. It was Robert who taught him his skills in what’s been described by many as “reality distortion.” Having seen numerous speeches by Robert over the years, I can attest to his masterful ability to utterly command a room of hundreds with his electric charisma. Some of that charisma must have rubbed off on Jobs, helping the future iPhone innovator evolve into the shrewd, larger-than-life business leader he’s celebrated as today.

Robert’s “reality distortion” was on full display during his visit. I was pleased and honored, as were my U.S. Global team members, to have the opportunity to hear his unique insights on a wide range of issues, from the debilitating smog in Delhi, India; to China’s efforts to become the world’s leading electric vehicle (EV) economy; to Ivanhoe’s development of the Kamoa-Kakula Copper Project in the Democratic Republic of Congo, independently ranked as the largest high-grade copper discovery in the world.

Robert made a very compelling case for Kamoa-Kakula, which he calls “the most disruptive Tier One copper project in the world today.” In its first year of production, its average copper grade is estimated to average an ultra-high 7.3 percent. Because the site is flat and uninhabited, and wages are paid in local currency, the cash cost for the life of the mine is projected to be a low, low $0.64 per pound of copper. As of my writing this, copper is priced at $3.20 a pound, so the margin is significant. After an initial $1.2 billion in capital costs to develop the project, the company expects a payback period of only 3.1 years.

I reminded Robert that we’re bullish on both copper and the industries it supports, including the imminent EV revolution and massive electricity demand in emerging markets, especially China and India. EVs, as I’ve pointed out before, require three to four times as much copper as traditional gas-powered vehicles. By 2027, as much as 1.74 million metric tons of copper will be needed to meet EV demand alone, up from only 185,000 tons today, according to the International Copper Association.

The red metal was one of the best performing commodities last year, surging more than 30 percent, and with investment demand near all-time highs, I predict another year of phenomenal returns. That would represent a third straight year of positive gains, something copper hasn’t accomplished this decade.

As you can see below, open interest in copper futures on the Chicago Mercantile Exchange (CME) is still historically high, even after cooling somewhat from its all-time high set in late July, when contracts hit an average 319,000 contracts. Open positions last month averaged more than 285,000, up 7.3 percent from the previous month and 26.9 percent from December 2016.

Robert expressed confidence that copper—along with aluminum, cobalt, nickel, platinum and scandium—will be among the biggest beneficiaries of the global transition to EVs and clean energy.

“You’re going to need a telescope to see copper prices in 2021,” he told us theatrically.

A rally is already in the works. From its recent low two years ago this month, the Bloomberg Industrial Metals Subindex, which tracks aluminum, copper, nickel and zinc, has surged more than 65 percent. Support looks strong, and copper prices could be headed even higher on global supply disruptions, as labor negotiations continue in Chile, the world’s top producer of the red metal.

“There are between 20 and 25 collective negotiations expected. If some of them lead to significant strikes, that would have a positive impact on [copper] prices,” explained Sergio Hernandez, vice president of Cochilco, Chile’s state copper commission.

Other fundamental trends are driving commodities, as I’ve noted earlier. The global purchasing manager’s index (PMI), a gauge of the manufacturing industry, is near a seven-year high. Construction confidence in the eurozone turned positive. And construction spending here in the U.S. hit $1.257 trillion in November, a new high.

China and India Cleaning Up Its Act
About half of all the copper produced globally every year is consumed by China. Last year, the Asian giant set a new record in importing the red metal. Imports climbed to a never-before-seen 17.35 million metric tons in 2017, up 2.3 percent from the previous year.

The metal is needed not just for the construction of new buildings but also to manufacture millions of new electric vehicles in the world’s largest auto market. Sometime this year, China is expected to announce when it plans to outlaw gas-powered vehicles, joining a growing number of other countries, including the U.K. (which is shooting for a 2040 ban), France (2040), Germany (2030), India (“next 13 years”) and more.

According to Bloomberg New Energy Finance, about 1,293 gigawatts per hour (GWh) are forecast for the lithium-ion battery market. That’s up spectacularly from only 19 GWh in 2015. About two thirds of the demand will come from China and the U.S.

To accommodate all these new EVs, China has pledged to build a charging station for every vehicle on the road by 2020. That equates to around 4.8 million charging outlets and stations, requiring a total investment of $19 billion. China had 190,000 charging stations at the end of September, so to call this goal ambitious is an understatement. The U.S., by comparison, has a little over 64,000 outlets and stations around the country, according to the Department of Energy.

Even William Ford Jr., Ford Motor’s executive chairman, acknowledged that the Chinese are more aggressive than most in their mission to fully embrace the electric vehicle. “When I think of where EVs are going,” Ford said in Shanghai last month, “it’s clearly the case that China will lead the world in EV development.”

Not only was China the largest importer of copper, crude oil, natural gas and other natural resources, it also outspent every other country in new clean energy capacity. The country invested as much as $132.6 billion in 2017, about 16 percent more than the U.S. and Europe combined. The government’s efforts already seem to be having a positive effect, as sales of face masks and air purifiers in Beijing have fallen dramatically compared to last winter.

Sales of face masks in beijing are down this year thanks in part to the governments huge investment in clean energy

Another market that’s in urgent need of clean energy is India. In Delhi, the country’s capital territory, the air quality has become so noxious and filled with heavy metals that the World Health Organization has likened it to smoking at least 50 cigarettes a day. The city’s chief minister, Arvind Kejriwal, went so far as to call it a “gas chamber.”

Shell Shelling Out for Electricity Provider

It’s not just governments seeking to diversify their energy mix. Royal Dutch Shell, the largest oil company in Europe, is steadily acquiring smaller providers of electrical power and natural gas. In December it announced a deal to buy retail energy provider First Utility. It’s just the latest in a series of purchases by large oil and gas companies looking ahead to the day when charging stations, rather than gas stations, might be the norm.

In an interview this month, Shell CEO Ben van Beurden sees the current energy transition as an opportunity.

“We have to embrace the future, and the future will include battery electric cars,” van Beurden said. “Importantly, I believe Shell can achieve this without destroying value in the company. It is about identifying real business opportunities to thrive through the energy transition.”

As my friend Robert Friedland sees it, those business opportunities lie in copper, aluminum, cobalt and other key industrial metals.

“We’re in the battery business,” he told us, adding that very little of lithium-ion batteries is actually lithium.

Rio Tinto lifts force majeure at Kennecott copper mine www.mining.com

World’s second largest mining company Rio Tinto (ASX, LON:RIO) has lifted force majeure on shipments of refined copper from its Kennecott unit in the U.S., 79 days after adopting the measure.

Parliament ratifies EUR 5 million loan agreement www.montsame.mn

Ulaanbaatar /MONTSAME/ Parliament ratified a Mongolia-Germany loan agreement on January 26, which will fund the completion of the New Turbine for Darkhan Thermal Power Plant project, being implemented within the Energy Efficiency -I Program.

Swiss Development Agency to implement projects worth CHF 51.5 million in Mongolia www.montsame.mn

Ulaanbaatar /MONTSAME/ On 25 January 2018, the Swiss Agency for Development and Cooperation (SDC) presented its new Cooperation Strategy which will guide Switzerland’s engagement in Mongolia for the next four years.