The ‘One Belt, One Road’ (OBOR) initiative, launched by Xi Jingping, is more than an ambitious infrastructure project. It is perhaps the largest in history. It’s also the Chinese Premier’s legacy. With constitutional changes now permitting him to remain in office for life, there is an ever greater possibility of its delivery. Countries touched by it can look to consolidate trade with China, and benefit from the infrastructure dividend it brings. Here we set out four reasons why it could unleash Mongolia’s copper potential:
A Mongolian company, Steppe Gold, just listed on the Toronto Stock Exchange (TSX) at a valuation of US$25 million. The exchange- known for its focus on mining- is popular amongst exploration companies. This project, though in its infancy, is viewed as a baby step in developing 140,000 of ounces of precious metals in the first year of production. Perhaps for this reason, Steppe’s leadership team have described it as ‘low cost, low risk.’
On 21st May, an economic forum was convened in Ulaanbaatar with the aim of encouraging investment in Mongolia through Public-Private-Partnerships (PPPs). PPPs can take many forms- with varying degrees of success.
China has a population of nearly 1.4 billion. The IMF project 6.6% growth in 2018 (IMF). It is overwhelmingly Mongolia’s largest trading partner, with nearly 80% of exports going south (NSO). With closure of mines in Northern China- due to environmental restrictions- it has a growing appetite for the many commodities Mongolia exports.
We’ve written about the Mongolian Stock Exchange (MSE) and the remarkable returns it delivered in 2017. Though small and thinly traded, it provides a barometer of investor interest in the country since it is one of the simplest means to gain exposure to the industrial base of the country.
When we write about the potential for rental yields in Ulaanbaatar, we offer point to the large (and growing) expat community. Our narrative is that foreigners seek prime units, and though there has been no shortage of new commissions, there is a lack of actual delivery. These people, often transient, work in specialist roles, and have large housing packages, underpinned by even larger corporates.
Mongolian Properties is the oldest, largest, and most reputable Mongolian real estate agent. We are a real estate intermedeiary and advisory firm offering agency, representation, property, management, property valuations, interior design, furnishing and financial intermediation services.