New cracks in the global economy as exports tumble www.bbc.com

If you were in any doubt that the US China trade war is having an impact on Asia, look no further than Singapore's latest export figures.

Singapore saw exports fall for a second month in a row, this time by 17.3% in the month of June compared to a year ago.

This dramatic fall comes as Singapore's growth figures released last week showed a 3.4% decline in growth in comparison to the last quarter.

Canary in the coal mine?
So why should you care if Singapore is selling less of its stuff to the world than it used to?

The city state is one of the most trade-dependent economies in the world, and is often seen as a global indicator for trade.

Analysts are calling Singapore's data the "canary in the coal mine", a reference to a well-worn expression to indicate there is danger ahead.

The phrase comes from when miners used to carry caged canaries into mine shafts, to let them know if it was dangerous. The canaries would die if there was even a hint of poisonous gas in the mines, providing a warning signal for the miners to get out.

The worry amongst Asia-watchers is that Singapore's numbers are just a sign of more bad news to come from the rest of the region.

The trade war effect
There is increasing evidence to show that Asia's economies are being hit by the impact of the US-China trade war.

"Around the region it is a similar story," says Song Seng Wun, South East Asia economist for CIMB Private Bank.

"This trade war is coming at a time when global growth is slowing down after ten years of relatively stable times. Even if by some miracle a fairy taps her magic wand and the trade war disappears, all that would happen is that things would just be less bad - rather than really bad."

Firms look to new factories as tariffs bite
How worrying is China's economic slowdown?
Data from India, Indonesia and South Korea reads like a list of bad news. June was a particularly gloomy month for the three countries.

India saw exports fall by 9.7%, the first time in nine months.

Indonesia, which counts China as its biggest trading partner, also saw exports fall by 8.98% in comparison with the same period last year. And South Korea also saw exports fall by 13.5%.

All of these countries sell products ranging from palm oil and chemicals to semi-conductor chips to China. This week China posted the lowest quarterly growth it seen in close to three decades, partly on trade war worries.

President Trump's tariffs on Chinese goods now cover more than half of what China sells to the US. Which means that Chinese companies either have to cut their costs for their buyers, or sell less to the US.

And that means the countries supplying Chinese factories with products are also getting hit.

It doesn't look like it's going to get any better anytime soon. A report from the Japanese research house Nomura Holdings released this week on Asian exports shows that exports "should remain in the doldrums in the coming month".

Nomura blames this on the "lack of progress on US China trade negotiations", heightened global uncertainty weighing on corporate investment decisions and signs that that trade protectionism is being used as a 'weapon of foreign policy' around the region.

What happens next?
It isn't entirely clear yet when or if the US-China trade war will come to a resolution - or whether this is the start of a "broader shift in US policy away from free trade", as think tank Capital Economics points out.

President Trump has already indicated that Vietnam - which up to now has been a beneficiary of the US China trade war - could be next on his tariff list, and economists say Taiwan and South Korea could also be next in line.

Asia is home to the world's next generation of companies and consumers. By 2050 it could see its share of the global economy grow to 52%, according to the Asian Development Bank - which means the region would also be the main driver of global growth.

But analysts say if the US's anti-free trade trend continues and hits more of Asia's economies - that could hurt the region's long term potential growth rate - in turn hurting the rest of us.

Business confidence index shows optimistic results www.montsame.mn

Ulaanbaatar /MONTSAME/ According to a survey conducted by the Mongolian National Chamber of Commerce and Industry (MNCCI), Business Confidence Index 2018 had shown optimistic results or 0.47 for the first time.

Fitch affirms Mongolia at 'B'; Outlook Stable www.montsame.mn

Ulaanbaatar /MONTSAME/ On July 4, Fitch Ratings has affirmed Mongolia's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B' with a Stable Outlook.

Mongolia's ratings are supported by the country's robust growth outlook, improving fiscal metrics, and strong governance indicators. The ratings are constrained by Mongolia's narrow economic base, low external buffers, and a volatile political landscape, which can lead to sharp changes in economic policy and increases the likelihood of economic shocks.

The budget surplus was recorded at 2.6 percent of GDP in 2018, well above both the approved budget and Fitch's prior expectations. Budget outturns through end-May 2019 point to robust revenue and expenditure growth, even in the absence of new revenue-enhancing measures, which Fitch believes are consistent with the budget remaining broadly in balance in 2019. The prospect for continued fiscal outperformance into next year is considerably less certain amid a recent history of sharp increases in spending ahead of parliamentary elections, which are due to be held in mid-2020. Fitch forecasts the fiscal deficit to widen to 4 percent in 2020, above the authorities' projection of 2 percent, though we think there may be greater downside risks to the forecast owing to the political cycle.

Strong budget outturns combined with a robust economic recovery that started in early 2017 have led to a sharp decline in gross general government debt (GGGD). Fitch forecasts GGGD will fall to 60 percent of GDP by end-2019 from 70 percent a year earlier, below a peak of 93 percent in 2016. The agency's baseline forecasts continue to point to a gradual downward path for Mongolia's public debt dynamics post-2020, but our assumption for higher fiscal deficits implies GGGD will remain above the historical 'B' median of 49 percent for the foreseeable future.

The IMF has yet to conclude its sixth review of Mongolia's three-year Extended Fund Facility since late-2018 due to the outstanding completion of two prior actions pertaining to the asset quality review (AQR) of the financial sector. The IMF Article IV end-of-mission press release in June 2019 highlighted Mongolia's progress in strengthening its economic resilience, while underscoring the country's still insufficient buffers to withstand future external shocks.

External buffers have continued to strengthen, despite the delay of some IMF programme-linked disbursements. Foreign reserves were USD3.7 billion by end-May 2019, up from USD3.3 billion a year prior, and more than triple their value in early 2017. Fitch estimates foreign reserves are now equivalent to roughly 4.4x current-external payments, which puts Mongolia ahead of the 'B' median of 3.8x, and roughly on par with the 'BB' median of 4.3x, though a considerable proportion of outstanding reserves could be viewed as encumbered due to a CNY15 billion (USD2.1 billion) swap arrangement with the People's Bank of China.

Real GDP growth accelerated to 8.6 percent in 1Q19 from 6.7 percent in 2018. The strong growth performance has been in large part due to capital expenditure linked to the ongoing development of the underground phase of the Oyu Tolgoi copper mine, for which sustainable first production has been delayed until late 2021 or 2022. Fitch forecasts GDP growth of 7 percent in 2019 and 6 percent in 2020, broadly in line with the authorities' Medium Term Fiscal Framework assumptions, and considerably above the 'B' median of 3 percent.

source: fitchratings.com

Mongolia Awaits Star Players in 2022 World Cup Qualifying By The Associated Press www.nytimes.com

ULAANBAATAR, Mongolia — European glamor teams such as Manchester United and Real Madrid do not visit Mongolia on lucrative preseason tours, but this oft-forgotten Asian soccer outpost is about to get a taste of the big time on the qualifying road to the 2022 World Cup.

Soccer is far from the most popular sport in Mongolia but that may start to change after the country was drawn Wednesday with its first-ever appearance in the second round of World Cup qualifying with matches against Japan.

That could mean a visit from Shinji Kagawa on March 31 and other players on the side who compete in the top European leagues.

Kagawa is one of the few public signs of the sport on the congested streets of Ulaanbaatar, home to around half of the country's population of three million. The Borussia Dortmund player beams down from billboards that advertise the partnership between the German club and Mongolian Airlines.

"To play a big team like Japan will be very meaningful for Mongolia," national team coach Michael Weiss told The Associated Press. "Football is not a very big thing in Mongolia though there is interest and it is becoming more fashionable."

"Such a game will help promote the sport in a country without genuine professional clubs. More interest and then sponsors come on board then so does the government and then there is progress."

Mongolia, ranked 187th in the world, edged past Brunei in the first round in June to earn a place in Group F in the second round and eight much-needed competitive games. The climax will come against Japan. The Samurai Blue, ranked 28th, reached the last 16 of the 2018 World Cup.

They will likely face sub-zero temperatures even at the end of March. The harsh Mongolian climate sees long winters with the mercury ranging from between -20 Celsius (-4 Fahrenheit) to -40C (-40F) and does not lend itself to soccer. Archery, horse racing and wrestling are all more popular.

"Of course, the climate makes it hard but even in terms of facilities and general conditions we are far behind the rest of Asia," Weiss said. "I am not talking about Japan, China or South Korea but places like Bangladesh and Laos —these are the countries we have to compete with."

In order to do so, the other six games in the group are as important as the meetings with Japan. The second stage kicks off on Sept. 5 with a home game with Myanmar before meetings with Tajikistan and Kyrgyzstan.

Had Mongolia lost to Brunei in June then there would be no group stage and no competitive games at all until 2023.

"We would have been out of the picture for a long time if we had lost to Brunei," said Weiss, a veteran manager from Germany who was appointed to the Mongolian role in 2017. "That would have been very bad for us. We need these games so we can get the players together and we can help them develop."

Only the eight group winners and the four best second-place teams progress to the next stage where Asia's four automatic World Cup spots are up for grabs. That is the target for Japan, but for Mongolia the situation is a little more modest.

"We know that we are not going to be one of the 12 teams that go to the next stage but this is the start of a process for us," Weiss said. "We have put the train on the tracks and now we can start moving forward."

AI still 'has a long way to go' www.chinadaily.com.cn

Development of the artificial intelligence industry still has a long way to go before it can become "real intelligence" and be applied in various sectors, industry experts and market insiders said.

Turquoise Hill’s stock tanks on Mongolia troubles www.mining.com

Turquoise Hill’s (NSYE: TRQ) stock tanked over 42% on Tuesday, after releasing its Q2 2019 report, revealing costs for the expansion of its Oyu Tolgoi mine could increase by up to $1.9 billion.

Mongolia Adopts OECD's Three-Tiered Transfer Pricing Documentation www.mondaq.com

Following the announcement that it has joined the Inclusive Framework on BEPS1, the Mongolian Parliament has revised its transfer pricing regulations contained in General Taxation Law ("Revised GTL") and associated guidelines, which adopts the three-tiered transfer pricing documentation requirement to align with the recommendations from OECD BEPS Action 13.

High-speed railway to link Inner Mongolia, Beijing www.xinhuanet.com

HOHHOT, July 16 (Xinhua) -- A new high-speed railway linking Hohhot, capital of northern China's Inner Mongolia Autonomous Region and Zhangjiakou, the co-host city of the Beijing 2022 Winter Olympics, will become operational by year-end.

Rio Tint Q2 Iron Ore Shipments Down 3%; Says Mongolia Copper Mine To Cost More www.markets.businessinsider.com

(RTTNews) - Anglo-Australian mining giant Rio Tinto Plc (RTNTF, RIO, RIO.L, RTPPF) reported that Pilbara iron ore shipments in the second quarter were 3% lower than last year, due to recovery works following Tropical Cyclone Veronica. It reaffirmed its full-year shipment guidance.

Projects on animal identification and traceability to be implemented www.montsame.mn

Ulaanbaatar /MONTSAME/. The Ministry of Food, Agriculture and Light Industry and the UN Food and Agriculture Organization (FAO) will be jointly implementing projects on animal identification, registration system and improving the system on recording and traceability.