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.

Fed keeps U.S. rates steady, to start portfolio drawdown in October www.reuters.com

WASHINGTON (Reuters) - The U.S. Federal Reserve left interest rates unchanged on Wednesday but signaled it still expects one more increase by the end of the year despite a recent bout of low inflation.

Indian billionaire Agarwal to be Anglo American’s top shareholder www.mining.com

Indian billionaire Anil Agarwal is planning to increase its investment in Anglo American (LON:AAL) by as much as 1.5 billion pounds ($2 billion), which would make him the biggest shareholder in the diversified miner.

Trading report www.mse.mn

On September 20, 2017, 267,847 shares of 24 firms listed as Tier I, II, and III were traded. 11 firms’ shares increased, 7 decreased in price and 6 remained unchanged. Ikh Barilga JSC was the top performer, increasing 9.83 percent, whereas APU JSC was the worst performer, decreasing 8.12 percent.

Mongolia holds rate to stabilize inflation around target www.centralbanknews.info

Mongolia's central bank retained its policy rate at 12.0 percent "to stabilize inflation around the target rate and thereby facilitate the stability of the macroeconomic environment in the medium to long run."
The Bank of Mongolia (BM) cut its rate by 200 basis points in June, its first cut this year and the second cut following 100 point cut in December 2016 as the bank unwinds a 450-point rate hike in August 2016 to stabilize the exchange rate of the tugrik and preserve international reserves.
Mongolia's inflation rate rose to 5.0 percent in August from 3.4 percent in July, in line with its target of keeping inflation below 8 percent for 2017 to 2019.
Economic growth in Mongolia in the first half of the year topped forecasts, with growth at an annual rate of 5.3 percent, the BM said in a statement issued on September 19 and based on a meeting by the monetary policy committee on September 15.
"Furthermore, economic growth is expected to accelerate and inflation is expected to stabilize around the medium term target rate of 8 percent," the BM said, adding the economy is currently stimulated by improved external demand, relatively high prices of major export commodities and increased investment in the mining sector.
While the bank noted the positive sentiment in financial markets and the economy, it added that "further prospects are highly conditional on export prices and volume."
The exchange rate of the tugrik has been depreciating since July as it reverses a rise in the first 7 months of the year. The turgrik was trading around 2,465 to the U.S. dollar today, up 0.6 percent since the start of this year.
In May the IMF approved a 3-year, $434 million loan to Mongolia as part of a total financing package worth $5.5 billion that was supported by Japan, Korea, China, the World Bank and the Asian Development Bank, the fourth-largest package in IMF history.
The package supports the government's economic recovery program that is aimed at building foreign exchange reserves, putting debt on a sustainable path, strengthening the banking sector and securing sustainable growth.
With minerals, such as copper and coal, accounting for 90 percent of Mongolia's exports, the country was hit hard by the sharp drop in commodity prices and a slowdown in export markets.
Mongolia's Gross Domestic Product grew by an annual rate of 4.2 percent in the first quarter of this year, up from 1 percent in the fourth quarter of last year and a contraction of 1.6 percent in the third quarter of 2016.

The Bank of Mongolia issued the following statement:

"The Monetary Policy Committee meeting was held on 15 September 2017, and it was decided to keep the Policy rate unchanged at 12 percent.
As of August 2017, annual inflation measured by the consumer price index has reached 5 percent nationwide and 5.4 percent in Ulaanbaatar city. In the first half of this year, growth of the Mongolian economy exceeded forecasts and reached 5.3 percent (on annual basis). Furthermore, economic growth is expected to accelerate and inflation is expected to stabilize around the medium term target rate of 8 percent.
Mongolian economy is currently stimulated by improved external demand, relatively high prices of the major export commodities and increased investments in the mining sector. While the Bank observes positive changes in market sentiment and positive trends in economic activities, further prospects are highly conditional on export prices and volume.
The Bank’s decision to maintain the policy rate unchanged is consistent with its mandate to stabilize inflation around the target rate and thereby facilitate the stability of macroeconomic environment in the medium to long run.
Extracts of the meeting minutes will be released in two weeks on the Bank of Mongolia’s website."