Mongolia passes new securities law, paves way for giant mine IPO
ULAN BATOR - Mongolia's parliament finally passed a long-awaited securities law on Friday that will allow the state-owned firm mining the enormous Tavan Tolgoi coal deposit to launch a $3-billion initial public offering at home and overseas.
Khangai Altai, the chief executive of the fledgling Mongolian Stock Exchange said the new law would also help attract more companies to the exchange by introducing international standards, adding that it could eventually bring total market capitalisation to around $30-billion to $40-billion, from only around $1.3-billion at present.
According to a statement issued by the exchange, the law will allow companies to list on multiple markets, enabling those currently operating in Mongolia but listed on overseas bourses to launch IPOs at home as well.
The new legislation is also an essential part in allowing Erdenes Tavan Tolgoi LLC, the state-owned miner of the coveted Tavan Tolgoi coking coal project, to list in London and possibly Hong Kong.
The cash-strapped state-owned developer, Erdenes Tavan Tolgoi, has been planning to list the eastern Tsankhi block of the Tavan Tolgoi project for years, but the fundraising has been repeatedly delayed. The company said in January that it would not happen this year.
The London Stock Exchange signed a deal with its counterpart in Mongolia in 2011 to introduce new software, advise on capital market training, and bring its market rules up to date.
Although the Mongolian stock market was ranked as one of the world's best performing markets in 2010 and 2011, it suffered in 2012 largely as a result of slow growth in China, falling commodity prices, and the introduction of new regulations and taxes that deterred foreign investment.
The Mongolian Top-20 index, a measure of Mongolia's top 20 best-performing companies, fell 34.6 percent between January 3 2012 and May 23, 2013, according to the stock exchange's website.
Khangai said the law would become effective on January 2014, and that the Mongolian Stock Exchange would in the meantime make the necessary preparations.
"The reason for setting the January date is to prepare the infrastructure as far as introducing custodians and other necessities not yet present here in the market," he said.
"We'll be working with regulators to bring in the custodians globally. There's quite a big amount of work to do."
Edited by: Reuters
Khangai Altai, the chief executive of the fledgling Mongolian Stock Exchange said the new law would also help attract more companies to the exchange by introducing international standards, adding that it could eventually bring total market capitalisation to around $30-billion to $40-billion, from only around $1.3-billion at present.
According to a statement issued by the exchange, the law will allow companies to list on multiple markets, enabling those currently operating in Mongolia but listed on overseas bourses to launch IPOs at home as well.
The new legislation is also an essential part in allowing Erdenes Tavan Tolgoi LLC, the state-owned miner of the coveted Tavan Tolgoi coking coal project, to list in London and possibly Hong Kong.
The cash-strapped state-owned developer, Erdenes Tavan Tolgoi, has been planning to list the eastern Tsankhi block of the Tavan Tolgoi project for years, but the fundraising has been repeatedly delayed. The company said in January that it would not happen this year.
The London Stock Exchange signed a deal with its counterpart in Mongolia in 2011 to introduce new software, advise on capital market training, and bring its market rules up to date.
Although the Mongolian stock market was ranked as one of the world's best performing markets in 2010 and 2011, it suffered in 2012 largely as a result of slow growth in China, falling commodity prices, and the introduction of new regulations and taxes that deterred foreign investment.
The Mongolian Top-20 index, a measure of Mongolia's top 20 best-performing companies, fell 34.6 percent between January 3 2012 and May 23, 2013, according to the stock exchange's website.
Khangai said the law would become effective on January 2014, and that the Mongolian Stock Exchange would in the meantime make the necessary preparations.
"The reason for setting the January date is to prepare the infrastructure as far as introducing custodians and other necessities not yet present here in the market," he said.
"We'll be working with regulators to bring in the custodians globally. There's quite a big amount of work to do."
Edited by: Reuters
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