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I studied political philosophy in college at the London School of Economics. I have experience in trust banking. I have been published in the UB Post, Forbes Asia, and on Seeking Alpha. Frontier and emerging markets research and writing is my work. Sri Lanka and Mongolia are the primary focus of... More
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  • Mongolia: Why And How To Invest With Brokerages In Mongolia 11 comments
    Nov 21, 2012 10:27 PM | about stocks: TRQ, MOGLF, MNGGF, PRPCF

    [This article needs a full update from its original posting date of November 9, 2011. It is mostly in the same form as that date, though a few brokerages have been removed as personnel has changed. It will be updated when Mongolia complete updates to its securities law and stock exchange which are processes that have been ongoing for more than a year. Jon Springer, November 21, 2012.]

    You can open a brokerage account in Mongolia without going there and in this section I will try to cover the ground on some of your options among the many brokerages there. I met with six different brokerage firms while in Mongolia and opened multiple accounts. Transaction fees for stock trades I was quoted ranged from 2% to 3.5%, while for bonds I was quoted rates from 5 to 20 basis points. Required fees to open an account ranged from 5,000 Togrog (about $4) to 40,000 Togrog (about $32). Some account opening procedures may request having your signature notarized to have a power of attorney to trade stocks on your behalf, but this can be done in your home country as well with minimal effort. If you do not wish to give power of attorney, you do not have to, but the company may then seek your trade requests to be placed in writing (via traditional mail; not e-mail) to cover themselves for local compliance purposes.

    I was pretty consistently told that the stock trading rates could go below 2% if your trading volume is significant enough over time, though it cannot go much lower as a lot of fees are built in by the Mongolian Securities Clearing House and Central Depository (SCHCD). You will need to learn about the SCHCD if you open an account in Mongolia as your account and funds are technically held by the SCHCD, and your broker merely trades the account for you.

    If you do go to Mongolia, then you may also want to consider opening a bank account at one of the larger local banks such as Golomt, Trade and Development Bank (TDB), or Khan Bank, as one year certificates of deposit pay 10% and higher for interested investors planning travel to Mongolia. There are barriers to opening bank accounts from abroad.

    For those not traveling to Mongolia who seek exposure to Mongolia's CD market, ResCap, in conjunction with Origo Partners, is starting a MSE Liquidity Fund investing at least 30% in both the MSE and the Mongolia certificate of deposit markets (details below).

    Caveats and considerations

    You must understand that Mongolia's Stock Exchange is illiquid. Limit orders are obligatory, and patience in accumulating shares is required. The stock exchange is currently open two hours per day, and some think that is more than necessary. The London Stock Exchange is helping manage a transition toward: electronic trading, better corporate governance, increasing the amount of float some companies have on the exchange (some currently only float 3% of their shares), and delisting some of the 300 plus listed companies as most brokerages will tell you there are only 10 to 20 stocks listed on the MSE that are viable for trading. Companies on the MSE are limited to moving a maximum of 15% up or down in a single day.

    With all these brokerage firms, you should visit their websites yourself, and talk to them yourself. Some things you should consider:

    - What is the quality of the research they provide?

    - What is their policy on recommending, advising or consulting you about stocks and bonds to invest in?

    - How responsive are they to e-mails or phone calls?

    - For how much money you will invest with them, are they the right firm for you?

    - Will they understand if you want to send a smaller amount of money over first as a trial investment?

    - Will they get upset if you open more than one brokerage account in Mongolia? (The SCHCD links account at multiple brokerages so you receive a single statement. You do not have to tell the brokerage when you open an account that you already have another account, but they will discover it if you do not as the brokerages see all your holdings in a linked account, along with your particular cash balance with them.)

    Investing as little as $10,000 in a brokerage account is feasible, and most brokerages have no minimum required investment. However, like anywhere else, the service level you will receive is better with bigger investments. Arbitrarily, I am using $250,000 as a break point. If you are opening an account with less than $250,000, you should do more due diligence before deciding on a brokerage or brokerages.

    BDSec is far and away the largest brokerage house in Mongolia, and this is without question with their dominance of about 60% of daily transactions on the MSE. BDSec is also the biggest dealer of government and corporate bonds, and if you are looking to develop a bond portfolio they will likely gain you better access.

    The other five brokerages I spoke with claimed they are typically the #2, #3, or #4 brokerage in Mongolia in some fashion or other: Eurasia Capital, Frontier, ResCap, Asia Pacific Securities, and Monet Capital. Prior to going into detailed discussion of the brokerage houses, one should be aware of the marketplace you are investing in.

    Among five local companies listed on the Mongolia Stock Exchange I visited while in Mongolia, the quality of financials varies widely. Deeper investigations of some company's financials may still not get you full accuracy in some cases (consider the reputation of Chinese financials). Other companies are pushing their financials toward higher standards. Some companies are operating at a loss as they grow their business and investing in them might be like investing in in the 1990s, but there's always the risk that it is closer to 1998 bust than to Amazon. If your Mongolia broker provides you Price-Earnings, Price-Sales, Price-Book ratios and similar data, you need to investigate the source of those numbers and understand the balance between accuracy, trust, and belief the economy will carry these stocks higher as they improve their governance and accounting with guidance from the London Stock Exchange team onsite to improve the marketplace.

    The Mongolia Stock Exchange was the best performing stock market in the world in 2010 with returns of 136% with several coal companies going up more than 200% in a year. However, one person told me this year while the overall Mongolian stock market has not done that well since the spring, their best performing stock was local dairy company SUU which had doubled in value since they invested. One must consider a balanced approach to investing in companies in Mongolia as anywhere else.

    You should also consider bonds. Mongolia's government backed bonds include, as a recent example, a 5-year 12% bond. At the same time there is currently an under-subscribed one-year corporate bond from Just Agro yielding 16.2%. It has been undersubscribed to-date as local people still are not trusting capital markets after the declines in 2009; and local people have shown a preference for the bonds that are government backed as more secure. Just Agro's bond is the first corporate bond issued in Mongolia in two years. The purpose of Just Agro's corporate bond is "to increase the current production amount [of meat products] which has been less than 30% of the company's installed capacity in the last 4 years due to a lack of working capital" (quoted from BDSec's Mongol Meat Bond Investor Presentation).

    I had the opportunity to meet with Just Agro management and to ask management all the questions I wanted to feel that their bond is a sound investment. But, that will not be normal daily investing for myself as I live in the United States, and is not likely a normal investing practice for you either. Thus, in choosing a brokerage house, take the time to determine which company or companies will provide you with the data you need. If you're not sure, open multiple accounts and consolidate funds when its clear who provides better services. Inquire with brokerages about what you need to do to get daily and weekly updates that clients do on a trial basis to better evaluate your brokerage house options - this may entail opening an account without funding it.

    One final important note. If you do open a brokerage account in Mongolia, when you wire funds, be sure to put in the comments: For investment purposes only. Your funds may be held and delayed by someone suspicious of your motives for wiring funds to Mongolia, but this notation should decrease the chances of that happening.


    If you want access to sit down and talk with companies listed on the Mongolia Stock Exchange on your next/first visit to Mongolia, BDSec is the brokerage house in the best position to organize such meetings for you. All my meetings with local companies were arranged through the efforts of BDSec, and I am grateful to them for it. Understand if you go to Mongolia as a BDSec investor and they arrange meetings for you, that the meeting times for company visits often involve changes in times, cancellations, and last minute additions to your meeting list. These are businesses that are busy and acclimating to a new level of attention from investors.

    BDSec typically has 60% of the trading volume on the Mongolia Stock Exchange on any business day. The second ranked brokerage is typically in the vicinity of 5% of the volume. BDSec is also are a major player in the bond business which has changed since an agreement with the Asian Development Bank concluded in October 2010 that now allows the Mongolian government to once again issue sovereign debt. All governments bonds initially go through BDSec, although other brokerages certainly can trade them.

    BDSec is the only brokerage that is also publicly traded on the Mongolia Stock Exchange. Competing brokerages will note that the backing of James Passin's Firebird Capital Management (a hedge fund discussed below) since 2005 is BDSec's ticket to market dominance. Mr. Passin is on the board of BDSec and several other companies listed on the Mongolia Stock Exchange.

    At BDSec, I met with Executive Director Dayanbilguun Danzan, manager Mr. Munkhtulga Ganbold, and specialist Mr. Dagiijanchiv Chuluunbaatar. For account opening details at BDSec, e-mail Dagii at, or for accounts over $250,000, email Mr. Munkhtulga Ganbold at

    Eurasia Capital and Silk Road Management

    Mr. Alisher Ali is Chairman of Eurasia Capital and managing partner of Silk Road Management (SRM). He is additionally chairman of real estate investment group Mongolia Development Resources, a company publicly traded on the Mongolia Stock Exchange. His sound bites are on television and in articles seemingly more often than all his colleagues combined. SRM is a Mongolia-dedicated investment management firm focusing on investing in various asset classes including public equities, private equity and property. SRM run the Mongolia Human Capital Fund, a venture capital and private equity fund, and creates proprietary indexes that track Mongolia and Central Asia's markets.

    At Eurasia Capital, I met with research analyst Hoosniddin Hakimov, e-mail, and metals and mining analyst, Mr. Akmal Aminov, e-mail Mr. Hakimov, who was also kind enough to bring me to a very good Uzbek restaurant for dinner, works with international brokerage clients.

    By chance, Eurasia Capital was the first brokerage I met with on September 12, 2011, my first business day in Mongolia. Data points they provided me about stocks listed both on the Mongolia Stock Exchange and stocks traded outside the country, as well as other data about Mongolia and the operations of its stock exchange, was concurred with by other brokerages and investors in Mongolia 90% of the time or better during the remainder of my stay.

    Messrs. Aminov and Hakimov showed good knowledge of the markets when I met with them and were candid about market investment risks. Although Eurasia Capital has no minimum for investment by individual investors, they felt an investment of $10,000 for individual investors was enough to get a decent start investing on the Mongolia Stock Exchange and develop a sense of how it works, and if you wish to add more funds in the future. The minimum investment for corporate and institutional clients will be higher and depend on the relationship. Eurasia puts out daily and weekly research notes which can be subscribed to by registering with their website.


    At ResCap I met with David Hanbury and Eric Zurrin. Mr. Zurrin, like Mr. Leslie at Origo Partners (Origo owns 35% of ResCap), Mr. Zurrin comes from a background working at UBS for five years. Mr. Hanbury has a degree in Engineering Science from Oxford and worked at an asset management firm in London prior to coming to Mongolia. If you click on the "research" tab at ResCap Mongolia's website, you can then link to their extensive "ResCap Mongolia 101 Country Guide." Like the other firms above, ResCap puts out regular notes about news and events in Mongolia, most of which may be found on the first page of their website including their Mongolia Minute newsletter.

    Their self-described boutique investment company is quite new having been set up in the first half of 2010. ResCap is admittedly trying to do business of scale whether it is brokering large block trades on the Mongolia Stock Exchange or corporate finance. They are also in joint ventures previously mentioned in this article to launch the MSE Liquidity Fund in conjunction with Origo Partners and the Real Estate Mongolia fund in conjunction with Chris de Gruben's M.A.D. Investment Solutions. They will accept brokerage accounts of all sizes, but the company is structured to handle clientele with significant assets.

    For account opening information, e-mail If the account will be over $250,000, you may contact ResCap CEO Eric Zurrin at

    Experienced Investing

    While other famous investors, such as Jim Rogers and Marc Faber, may have been in Mongolia earlier, the local ex-pat investment celebrities you can invest with are Lee Cashell and James Passin. Mr. Passin is with hedge fund outfit Firebird Management LLC. He manages the Firebird Mongolia Fund and the Firebird New Mongolia Fund. He sits on the board of several Mongolian companies including BDSec and Sharyn Gol (a leading Mongolian coal company). According to an October 20, 2011, report on Bloomberg television, Firebird Mongolia Fund is the second best performing hedge fund year-to-date. Class A shares of Firebird Mongolia Fund after fees and expenses were up 46% year-to-date at the end of August, and up 34% year-to-date at the end of September. Mr. Passin started investing in the Mongolian Stock Market in 2005, and Firebird has significant investments in the Mongolian market. The Firebird New Mongolia Fund is currently open to qualified new investors (for individuals, total invested assets over $5,000,000). Contact Ellen D'Aleo at 212-698-9285 for further information.

    Disclosure: See my full list of disclosures on my Mongolia Weekly Update homepage.

    Other articles:
    Mongolia: Why And How To Invest In China's Canada
    Mongolia: Why And How To Invest In Stocks
    Mongolia: Why And How To Invest In Real Estate
    Mongolia: Why And How To Invest, Further Considerations
    Mongolia Weekly News Blog

    © Jon Springer. Please contact for the right to copy or reproduce this article.

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Comments (11)
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  • Free Cash Flow 50
    , contributor
    Comments (106) | Send Message
    Thanks for all your hard work Jon, this article is pure gold. I think a fitting name for you would be Mr. Mongolia. Cheers
    9 Dec 2011, 01:42 PM Reply Like
  • sharfich
    , contributor
    Comments (7) | Send Message
    Hi Jon, it is quite amazing to see your experiences as they are similar from timing and impression to mine (though on a smaller scale). I was in Mongolia in summer 2011 and started checking the above mentioned brokerages later by email in September but only Monet responded, so I chose them to open the account with. I also found the government bonds quite attractive but you might also mention the volatility of the MNT which needs to be considered when sending money in and out of Mongolia. You might also mention that there is a 10% capital gains tax.
    20 Mar 2012, 01:58 PM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
    Author’s reply » Greetings Sharfich,


    Thank you so much for the comment and would love to hear further about your experiences with Monet.


    10% cap gains tax is covered in tax section here, the first part of the series, but probably bears re-mentioning in the brokerage section:


    I will be writing a follow-up on the brokerages by end of April (hopefully sooner) after more data from my second trip, and some experience holding brokerage accounts with various companies.


    MNT (Mongolia's Tugrik) stability is an interesting issue to address. There are seasonal issues (weaker December to March), political questions (elections in June this year), poor global media coverage (the politics of the country often get the most attention when a minority group in the government makes an attention-getting proposal that will never pass; see Ivanhoe's share price troubles and coverage for examples), and ultimately, a lot of pressures that long-term should cause the currency to appreciate but will also cause inflation that it is inherent on the Bank of Mongolia to manage. The most data on the macro outlook for the currency is collected by Dale Choi at Frontier in his (almost) daily strategy notes which can be found here:


    That said, each brokerage has a particular outlook on the Tugrik worth considering. Frontier makes their data publicly accesible and thus citable.
    20 Mar 2012, 02:41 PM Reply Like
  • sharfich
    , contributor
    Comments (7) | Send Message
    Thank you for the tax hint, Jon. I overlooked that one. Actually, from the large international banks only ING (research analyst Tim Condon) follows the MNT once for a while with some macro view on it. Otherwise, nothing. ING is obviously also one of the largest onshore investors into the MNT government bonds.
    My experience with Monet is quite good. Their young Analyst Ms. Chuluuntsetseg is very motivated and happy to explain you things but also to listen. I find the daily clippings from Oliver also quite helpful. Stefan
    22 Mar 2012, 09:43 AM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
    Author’s reply » Thank you Stefan.


    I will have to ask Oli why I haven't met Ms. Chuluuntsetseg yet next trip over. She sounds like a good resource.


    On the MNT, I think the best data will come from the folks that live there. Generic outlook summarized differently than above, and off the cuff, is:
    - instability and unknowable through the elections in June
    - stabilizing post-election
    - strengthening when Oyu Tolgoi begins operations in the second half
    - seasonal weakness coming back in late November early December
    - further strenghthening probably come March after seasonal weakness, as both Oyu Tolgoi and Tavan Tolgoia ramp up operations in 2013.


    We'll see if that's right, but that seems to be the summary guess with the most unpredictable portion being between now and July.


    Much obliged for your insights.


    22 Mar 2012, 09:53 AM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
    Author’s reply » Stefan,


    This may of interest and just came out in the past week. Frontier Securities Exchange Rate Outlook (19 pages):
    26 Mar 2012, 09:32 PM Reply Like
  • sharfich
    , contributor
    Comments (7) | Send Message
    Very much appreciated, Jon. Thank you.This is very detailed and ggod background info.
    27 Mar 2012, 09:37 AM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
    Author’s reply » Message I receive that may be useful for some in lieu of me updating this article:


    Dear Jon,


    I have just read your article "Why And How To Invest With Brokerages In Mongolia". Thank you for so detailed information about Mongolian stock exchange market. Its pleasure to read so good article.


    Just for update to your information there are new two brokerage companies that are subsidiaries of domestic commercial banks that could take your attention, Golomt Securities and TDB capital. Also there are some changes in government bond market. The initial trade is now done only on central bank of Mongolia's platform and prime brokers are commercial banks. Regarding the secondary market its not decided yet but it should be traded on MSE. If you need any detailed information please don't hesitate to contact us at


    your brokerage firm Golomt Securities
    Bayasgalan Dashdorj
    On Linked In
    18 Dec 2012, 08:09 AM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
    Author’s reply » I am additionally told, " its now possible to open bank account from abroad."
    18 Dec 2012, 10:36 PM Reply Like
    , contributor
    Comments (6) | Send Message
    Standard Investment can also be recommended (


    Write to Richard Kobayashi CEO: richard@standardinvest...
    22 Jan 2013, 02:08 AM Reply Like
  • Valley Boy
    , contributor
    Comments (2220) | Send Message
    Securities laws are being revised.
    24 May 2013, 10:44 PM Reply Like
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