| ULAANBAATAR, April 5
ULAANBAATAR, April 5 Mongolia's Stock Exchange
warned it may be cut from the watchlist of candidates for the
FTSE Russell frontier markets index unless it meets regulatory
standards by August.
The country was first placed on the watchlist in 2012, after
its growth hit an all-time high of 17.3 percent. However, a drop
in the prices for coal and copper and a slowdown in Chinese
growth have since taken their toll on Mongolia's economy.
"FTSE Russell intends to announce the removal of Mongolia
from the FTSE Watchlist, absent tangible progress on removing
the main obstacles listed below before the end of August 2017,"
the Mongolia Stock Exchange said in a statement on its website
The International Monetary Fund (IMF) and partners are
expected to bail Mongolia out with $5.5 billion in credits.
Private investors' views on the country, whose untapped
resource wealth is estimated to exceed $1 trillion, have soured
because of mining disputes and falling commodity prices.
A letter from FTSE Russell, which was quoted in the
statement, noted Mongolia's failure to meet regulatory standards
for the Mongolia Stock Exchange (MSE) and a lack of global
custodians in the country.
Altai Khangai, the head of the MSE, said on Wednesday he was
in London ahead of a meeting on Thursday with FTSE Russell.
"I think the outcome of the meeting will be positive,"
Khangai told Reuters.
Investors in Mongolia have also been spooked by disputes
with Anglo-Australian miner Rio Tinto over the Oyu
Tolgoi copper mine that delayed construction on the $5.3 billion
project for underground mining for two years, from 2013 to 2015.
The MSE has also failed to live up to expectations since it
was added to the watchlist, with the MSE Top-20 Index falling
37.6 percent since the end of 2013.
"It gives warning to MSE to put its act together before
August," Darambazar Achit-Erdene, chief executive and president
of Mongolia International Capital Corporation (MICC), said.
"There have been many changes in the management of MSE, and
for past years, FTSE hasn’t been a top priority of MSE
management," Achit-Erdene added. There is still time for the
stock exchange to comply with the standards, he said, and
bringing in foreign custodians would be good for the market.
Achit-Erdene added that bolstering the MSE could give
foreign investors exposure to Mongolia's largest mining assets.
These include the enormous Tavan Tolgoi coal mine, which the
government has long delayed plans to list on the MSE
simultaneously with foreign exchanges.
"With commodity prices improving and the launch of an IMF
program in Mongolia, its a good time to develop the MSE,"
(Editing by Alexander Smith)