FMG launches Mongolia Investment Fund
A new investment fund focusing on Mongolia has been launched by FMG, a specialist in emerging markets investments, to capitalise on the country’s booming economy and close economic links to China.
Mongolia is often ranked as the world’s fastest growing economy, and GDP growth of between 23% and 26% is expected for 2012. The world’s 19th largest country, Mongolia’s mineral wealth is largely unexplored. As a potential mining and commodities giant, with significant reserves of coal, uranium, rare earths, copper, gold and iron, Mongolia is well positioned to supply the demands of its neighbour China, the world’s largest commodity consumer.
As a frontier market, the Mongolian Stock Exchange (MSE) is insulated from global trends: in 2011 Mongolian stocks rose by over 15%. The London Stock Exchange (LSE) has been hired to help bring the MSE to the London’s standard in 3 years. The LSE anticipates that the domestic stock market will increase from approximately US$3bn to US$45bn within 10 years.
Arild Johansen, FMG partner, said: “Most observers rank Mongolia as the fastest growing economy in the years to come. It has huge future revenues potential and is blessed with key resources for a hungry growing world, and cost advantage of being right next door to the largest commodity consumer of them all, China.”
The fund will invest in various securities among the top 25 liquid names on the MSE. The asset allocation of the fund is: financials 4%, real estate 5%, construction 10%, consumer 39%, mining 42%, and the five largest holdings are APU, Remicon, Sharyn Gol, Tavan Tolgoi, Talkh Chikher.