Not many seem to have been watching but it appears that the MSE 20 index has put in a bottom and has been moving higher recently. Many, although it has been debated, view that markets are discounting mechanisms and look out six months to year in advance. Is the bottom and recent strength in the market an indication that we can expect further positive news flow from Mongolia? That is my view. I have been of the opinion that both the parliamentary elections and the recent presidential election caused significant amount of uncertainty in the market. This uncertainty was further clouded by the OT project being used as a political football during the recent elections. Nevertheless the DP party now controls most of the government and it is undeniable that positive change is happening. Yes there has been and will always be MP's from the opposition party that throw bombs out about nationalization and renegotiation of the OT agreement but the bottom line is that the government knows that everyone is watching this one deal. My view, and it appears that the market is sniffing this out, is that resolution is coming sooner rather later. OT is the end all be all issue that everyone is focusing on whether we like it or not. With foreign reserves shrinking ,depreciation of the currency becoming an issue, along with shrinking of FDI the only two choices are for the GOM to get with the program and get perceptions changed by acting positively or get ready for another IMF bailout. The market appears to be saying it will be the former rather than the later. Even with all this turmoil many of the companies on the MSE have been delivering increased revenues and earnings. This is a really cheap market and any change in perception, even at the margin, will lead to a big move higher in my view.
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