I have had excellent intentions of writing something about Mongolia for you ever since I interviewed Chris Rynning of Origo Partners Plca few weeks ago. However, I put it off and now I see that Dominic Frisby has beaten me to it in yesterday's Money Morning: Feeling adventurous? Here's the next great land of opportunity.
Dominic sums up the case pretty well, but the problem for me with Mongolia is China. Its future prosperity appears to be leveraged almost completely to Chinese demand for its astonishingly abundant natural resources. 98% of Mongolian exports go to China.
So what happens if China and Chinese demand crashes? Chris who has worked in China for decades doesn't think it will. But even if our bearish case does play out, he isn't convinced that it will affect Mongolia particularly badly. It is, he says, "always easier" to transport the likes of coal across one land border than over many oceans. That gives Mongolia a massive advantage over Australia, New Zealand and Brazil.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
If demand for commodities as a whole falls, it is entirely possible that demand for commodities from Mongolia will still rise. Right now, Mongolia is only just starting out down its exporting path (it is still a net importer) but as it becomes a net exporter (from next year), says Chris, it will find itself with a trade surplus and then, as is usually the way, with a rising currency. That'll be good for those who invest now.
Investing, as Dominic points out in his piece, isn't easy. Even Chris quite the fan of Mongolia notes that valuations are "all over the place" and liquidity is "hopeless". However, he also thinks that will change as Mongolia's partnership with the LSE gets underwayand as its large resource groups start to list.
This is risky stuff, but if it interests you, Origo have set up a Mongolia fund which you can find out more about here(minimum investment $10,000). It is interesting for the equity exposure but also for the cash exposure: interest rates in Mongolia are around 14-15% which even if you take its high inflation into account still means that depositors are making a real return of 5-6%. That's not something you can say of many other countries.
-
House prices rise 2.9% – will the recovery continue?House prices grew by 2.9% on an annual basis in September. Will Budget policies and ‘higher-for-longer’ rates dent the recovery?
-
Nvidia earnings: what to expectNvidia announces earnings after market close on 20 November. What should investors expect from the semiconductor giant?
-
House prices to crash? Your house may still be making you money, but not for much longerOpinion If you’re relying on your property to fund your pension, you may have to think again. But, says Merryn Somerset Webb, if house prices start to fall there may be a silver lining.
-
Prepare your portfolio for recessionOpinion A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, says Merryn Somerset Webb.
-
Investing for income? Here are six investment trusts to buy nowOpinion For many savers and investors, income is getting hard to find. But it's not impossible to find, says Merryn Somerset Webb. Here, she picks six investment trusts that are currently yielding more than 4%.
-
Stories are great – but investors should stick to realityOpinion Everybody loves a story – and investors are no exception. But it’s easy to get carried away, says Merryn Somerset Webb, and forget the underlying truth of the market.
-
Everything is collapsing at once – here’s what to do about itOpinion Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect their wealth.
-
Value is starting to emerge in the marketsOpinion If you are looking for long-term value in the markets, some is beginning to emerge, says Merryn Somerset Webb. Indeed, you may soon be able to buy traditionally expensive growth stocks on the cheap, too.
-
ESG investing could end up being a classic mistakeOpinion ESG investing has been embraced with enormous speed and zeal. But think long and hard before buying in, says Merryn Somerset Webb.
-
UK house prices will fall – but not for a few yearsOpinion UK house prices look out of reach for many. But the truth is that British property is surprisingly affordable, says Merryn Somerset Webb. Prices will fall at some point – but not yet.
