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John Thomas graduated with a bachelor’s degree in biochemistry with honors and a minor in mathematics from the University of California at Los Angeles (U.C.L.A.) in 1974. He moved to Tokyo, Japan where he was employed by a medium-sized Japanese securities house. Thomas became fluent in... More
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  • The Next Big Asian Play is in Mongolia 1 comment
    Sep 9, 2009 03:10 PM | about stocks: RTP, IVN
    There’s nowhere I won’t go to make a buck, so I had to sit up and pay attention when friends in Tokyo told me that the next big Asian equity play will be in Mongolia. Genghis Khan’s ancestral land has enormous mineral resources which make it a natural commodity play (did he know?), and it has one of the world’s most GDP friendly population pyramids. But incompetent government administrators with antiquated Soviet era sentiments managed to kill every nascent development opportunity in the crib with onerous windfall taxes and harsh joint venture restrictions. The resources stayed in the ground. National elections finally turned over the regressive administration in 2008, and the anti growth tax regime was dumped last week. Mongolia is now close to inking a deal with Ivanhoe Mines (IVN) and Rio Tinto (RTP) to develop the massive Oyu Tolgoi gold and copper mine, which could lead to a doubling of the GDP in five years. We’re talking a gigantic 450,000 tons of copper and 330,000 ounces of gold a year. Also on tap is the development of huge coking coal and uranium deposits. The spillover benefits for the rest of the economy would be substantial.  Mongolia’s Lilliputian stock market offers few opportunities for foreign investors. So unless you want to get a job there or invest directly in a local company, you’ll have to wait for the ETF to come out, and then the dip to get in. This is exactly what unfolded in Vietnam. Now that visas are no longer impossible to get, as they were in my day, my Japanese and Chinese speaking son tells me that Ulan Bator has become the trendy place for American college grads fleeing unemployment at home. Who knows? Give me a low enough PE multiple and I might even develop a taste for sheep brains and fermented mare’s milk.
    Stocks: RTP, IVN
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This post has 1 comment:

  •  
    Actually, Genghis Khan's ancestral land was further northwest (just east of Lake Baikal, using its Mongolian name). Today's "Mongolia" was a buffer zone between the real Mongolia and China. But the Russians occupied the old Mongolia, and pushed the Mongolians into "Mongolia."

    I guess "Turnabout is fair play."
    Sep 09 04:32 PM | Link | Reply
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