New train service on Trans-Siberian corridor swaps loads in Mongolia www.railfreight.com

A new regular container train service was launched on the Trans-Siberian route between China and Russia. The service makes the return of empty trains unnessecary, as trains departing from both countries meet in Mongolia, where they swap their load and return to their point of departure. 

EBRD First Vice President Bennett to visit Mongolia www.ebrd.com

EBRD First Vice President Phil Bennett will visit Mongolia next week to meet the interim government and the business community. It will be the first visit of a member of the Bank’s Executive Committee since the adoption of the new country strategy for Mongolia in June 2017.

Mongolia's tiny stock market soars on coal trade renaissance www.reuters.com

ULAANBAATAR, Sept 21 (Reuters) - A boom in the coal trade in Mongolia has helped elevate the country’s benchmark stock index and pump the tiny exchange’s market capitalisation to five-year highs as optimism about the economy grows following a bailout deal.

Coal miners in the landlocked north Asian country are set to increase production on the back of improved market conditions as demand grows from top trade partner China. Mongolia has helped fill a supply gap following Beijing’s ban on imports from North Korea and some smaller ports, as well as the closure in China of mines from tougher environmental regulations.

A $5.5 billion bailout approved by the International Monetary Fund (IMF) this year has also helped underpin positive market sentiment, although the disbursement of funds was delayed earlier this month when the government was toppled in a parliamentary no-confidence vote.

“Coal exports into China were growing very quickly in the first half of this year,” said Dashdorj Bilguun, director of capital markets at Golomt Capital in Ulaanbaatar.

“That’s translated into higher than expected GDP growth.”

Foreign interest remains limited and the market is thinly traded but the market’s headline performance has nonetheless been impressive.

The Mongolia Stock Exchange Top 20 Index has soared more than 45 percent since the start of the year to highs not seen since March 2012.

Total capitalisation of the market, meanwhile, for the first time surpassed the 2 trillion tugrik ($812.35 million) mark on Monday.

That’s an increase of more than 40 percent over last year and the highest - in local currency terms - since 2012, when the economy grew 12.3 percent. In dollar terms, however, market cap is smaller than it was five year ago because the tugrik has nearly halved in value against the dollar.

Mongolia reported 5.3 percent growth in the first half of 2017 with coal exports more than quadrupling over the same period the year before.

Leading the share market charge is Tavantolgoi JSC , a partially state-owned coal company in the Gobi Desert.

Drink maker APU JSC, another heavyweight, was also up on news of its planned merger with Heineken’s beer and vodka business in Mongolia, which was announced in July.

Tavantolgoi’s share price has risen by nearly five times over the past 12 months, while APU’s is up more than 50 percent.

Combined, both companies account for close to half of Mongolia’s entire market capitalisation.

There are risks to the rally. Political uncertainty has returned with the ousting of the prime minister and cabinet by lawmakers this month.

And coal exports may face troubles in the coming months as bottlenecks at the Chinese border slow trade.

But the domestic market is now likely to find more persistent support with a new government tax on savings interest giving local investors cause to look for places other than the bank to park their money.

“The money is flowing to corporate bonds and stocks,” Bilguun said.

More bad news for copper price www.mining.com

Copper futures trading on the Comex market in New York turned lower again on Thursday after indications that top consumer China will be well supplied with concentrate going in the the fourth quarter.

Trading report www.mse.mn

On September 21, 2017, 246,829 shares of 27 firms listed as Tier I, II, and III were traded. 14 firms’ shares increased, 10 decreased in price and 3 remained unchanged. Moninjbar JSC was the top performer, increasing 14.96 percent, whereas Darkhan Nekhii JSC was the worst performer, decreasing 12 percent.

Construction begins in China-Mongolia cross-border economic zone www.xinhuanet.com

HOHHOT, Sept. 21 (Xinhua) -- China 22MCC Group Thursday signed an agreement on infrastructure programs with the municipal government of Erenhot, China's largest hub for cross-border trade with Mongolia, marking the official beginning of construction on the China-Mongolia economic cooperation zone.
Under the agreement, China 22MCC Group is responsible for the construction of underground pipelines, office buildings, roads and plants within the Chinese section of the zone. The total investment for the projects is around 824 million yuan (125 million U.S. dollars).
Construction of the infrastructure will take two years, and China 22MCC Group will be the operator of the facilities for another 13 years.
In 2015, China and Mongolia agreed to dedicate 9 square kilometers on each side of the border to a joint economic zone, which comprises land in Erenhot, Inner Mongolia Autonomous Region and Zamyn-Uud, Mongolia. In May 2016, the two countries formally agreed on a comprehensive plan for the economic cooperation zone, which is expected to bolster trade in the China-Mongolia-Russia economic corridor.
The zone is a all-inclusive platform integrating international trade, logistics and warehousing, e-commerce, tourism and entertainment, as well as international finance.

Some 120 projects being implemented with State budget financing www.montsame.mn

Ulaanbaatar /MONTSAME/ Acting Minister of Finance gave a report during the Cabinet Meeting held September 20 about performance of projects and measures, which are being implemented with financing from the Development Bank of Mongolia (DBM), under repayment terms.

Belarus-Mongolia economic cooperation on the rise www.eng.belta.by

MINSK, 20 September (BelTA) – The economic cooperation between Belarus and Mongolia has intensified, Belarus' Industry Minister Vitaly Vovk said during the meeting with Purev Sergelen, Minister of Food, Agriculture and Light Industry of Mongolia, BelTA learned from the website of Belarus' Industry Ministry. "Thanks to the implementation of the agreements reached during the previous meeting of the Belarus-Mongolia commission we have made progress in our economic relations. However we should not be satisfied with what we have already achieved. We should move forward and increase the bilateral trade," Vitaly Vovk said. During the meeting of the Belarus-Mongolia joint commission, the sides discussed the prospects of cooperation in agriculture, food and light industry, transport, mining, construction, urban development, healthcare and environment. The Mongolian official delegation met with the Belarusian counterparts and visited several Belarusian production facilities including MTZ, BelAZ and MAZ automakers. In January-June 2017 Belarus' Industry Ministry companies exported some $2.5 million worth of products to Mongolia, which was up by 4.4% over the same period a year earlier.

Fitch: Mongolia IMF Review Delay Has No Immediate Rating Impact www.reuters.com

HONG KONG/SINGAPORE, September 20 (Fitch) The IMF's postponement of its late-September Board discussion on Mongolia's external financing package will delay disbursement of bailout funds, testing investor confidence and raising refinancing risks for the government, says Fitch Ratings. However, the delay is unlikely to extend significantly beyond year-end and should not affect the country's ability to meet near-term debt repayments. It therefore has no immediate ratings implications. The postponement of the Board meeting follows the ousting of the prime minister and cabinet in a no-confidence parliamentary vote on 7 September, which has been attributed to the ruling Mongolian People's Party's (MPP) loss of the presidential election to an opposition Democratic Party candidate in July. It was this outgoing administration that agreed to the terms of Mongolia's IMF-led three-year Extended Fund Facility (EFF), which was approved in May 2017. Disbursement of USD38 million from the IMF tied to completion of the first review will be withheld, along with some components of the financing from other international partners, until the IMF can discuss economic prospects and policies with the new government. Fitch views the delay of the Board meeting as relatively standard IMF protocol under the circumstances of heightened political uncertainty, needed to provide assurances that the incoming administration will be committed to the terms of the EFF. Early adherence to the conditions appears to have been strong. The IMF announced on 2 August a staff-level agreement on completion of the first review of the EFF, and stressed that performance had been good, with "all quantitative targets on track". In particular, it noted progress on structural reform and outperformance on fiscal metrics. In the meantime, the economy is rebounding - GDP growth accelerated to 5.3% yoy in 2Q17, from 1% in 2016. The government also recently appointed an auditor for an asset-quality review of the banking sector, which we expect to proceed. We expect the new administration to maintain policy continuity with the outgoing leadership and to remain committed to the IMF programme, given that parliament is heavily tilted in favour of the MPP, which holds 65 of 76 seats. A new candidate for prime minister is likely to be proposed by the MPP shortly, and to be confirmed by parliament following consultation with the president within the deadline of 6 October. The Ministry of Finance has sought to allay investor concerns by emphasising broad government backing for the IMF programme in a statement released on 19 September, stressing that "Mongolia continues to support the implementation of the IMF programme in full". The new leadership will face strong incentives not to change policy direction or break from the IMF, as either could risk shutting Mongolia out of external debt markets ahead of a USD500 million bond maturity in January 2018. Such a prospect would significantly increase the near-term probability of a sovereign default, given the country's low foreign reserve buffers (USD1.4 billion) and dependence on external capital markets for fiscal funding. Mongolia is particularly vulnerable to swings in investor sentiment, as a considerable portion of government borrowing is in the form of external marketable debt. Mongolia's sovereign rating has been downgraded twice since late 2015, as uneven economic policy has put pressure on public and external finances. The current rating of 'B-'/Stable factors in continuing IMF support, and assumes that the delay in the disbursement of IMF funds will not affect the bond repayment due in January 2018.

Housing price index of August, 2017 www.montsame.mn

Ulaanbaatar /MONTSAME/ Following is the public report of the July 2017 results of the “Housing Price Index” (HPI) research conducted independently by TenkhlegZuuch LLC at the request of Mongol Bank.