Mongolia emerges from the frontier

The fund, launched by emerging market asset manager FMG, has given its largest allocation, unsurprisingly, to mining stocks, which will make up 42% of the fund. Among the largest holdings in FMG’s fund is Tavan Tolgoi, a mining firm which is expected to create a brand new town of 60,000 people to service a vast new coal mine in Mongolia.

However, the second-largest allocation will be dedicated to consumer stocks, as AMG looks to ride growing demand from an increasingly wealthy population.

The World Bank expects Mongolia's economy to grow by over 15% this year.

The country’s government has taken a series of steps to attract foreign investment in recent years. Last year, it announced that the Mongolian Stock Exchange had engaged the London Stock Exchange to help it modernise.

The plan is for Mongolian exchange to reach the same standards as western exchanges within three years. According to estimates from the London Stock Exchange, the value of Mongolia’s stock market will increase dramatically, growing from $3bn today to $45bn over the next 10 years.

In February, Goldman Sachs bought a 4.8% stake in Mongolia’s oldest bank, the Trade and Development Bank.

In the same month, BNP Paribas became the first global custodian to support foreign investors moving into Mongolia with fund administration services. It won a custoday mandate from Harvest Global Investments, the Chinese fund manager which began investing in the country through its Asian Frontier Equity Fund.

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