Mongolia: The Saudi Arabia of Central Asia

Written By Christian DeHaemer

Posted September 24, 2010

It’s a big week as UN leaders from around the world have descended on the Big Apple for the 65th United Nations General Assembly. 

President Mahmoud Ahmadinejad of Iran threw rhetorical bombs at the United States.  

UN Secretary-General Ban Ki-moon spoke like a beauty pageant contestant — albeit with more geographical knowledge — by talking up peace, security, and an end to poverty.

President Obama and Premier Wen Jiabao of China sat down to discuss the problem of an undervalued Chinese currency.

Former President Clinton hosted an event to bring world leaders and philanthropists together for his Global Initiative. This is an extremely pragmatic organization that seeks to accomplish all the things Ban Ki-moon talked about. 

As you would expect, at a time when all the world leaders are in the same place, things happen. 

I was lucky enough to attend a small gathering put on by Firebird Management, the largest investor in Mongolia, featuring Mongolian Prime Minister Sukhbaatar Batbold.

The setting was a posh Broadway condo. The food was excellent and the waitresses looked like they’d just stepped off a fashion runway. The architecture was sleek, modern, and understated.

Some of the 75 people or so where bigwigs at places you’ve heard of, like Goldman Sachs and Morgan Stanley; but most of the people I met were private bankers, worked for large foundations, or were hedge fund traders of some sort — commodity, equity, frontier markets.

Without using an interpreter, PM Batbold outlined points I’ve been writing about for a year now…

Mongolia has vast reserves of mineral wealth, including the world’s largest gold mine and the fourth largest reserves of coal.

He mentioned the IMF has projected that Mongolia will be the best performing economy in terms of GDP growth over the next five years. He hammered home this point by saying that it won’t be China, India, Brazil, or any of the other countries you often hear about…

PM Batbold pointed out that Mongolia has very few restrictions on the movement of investment into and out of Mongolia. Foreigners can own 100% of a business, and the government does not prescreen; however, foreigners are not allowed to own land.

Strategic mineral and oil resources are subject to a 34% percent equity stake by the government.

The Prime Minister pointed to the October 2009 agreement between Ivanhoe Mines of Canada and Rio Tinto and the government of Mongolia to develop Oyu Tolgoi (OT). (OT is billed as the world’s largest undeveloped gold mine. It’s a copper-gold deposit located in the South Gobi desert.)

Mongolia gets 34% of the deal, which will inject $7 billion into the economy over the next few years. Considering the fact that the Mongolian GDP is somewhere between $6 billion and $9 billion, this single deal is expected to double the economy.

The PM outlined the vast mineral resources of Mongolia in terms of oil, natural gas, coal, uranium, lithium, etc… Along those lines, he pointed to the problems in transporting these natural resources to industrial markets.

His goal is to develop industries that add value to these raw materials in Mongolia, and so advance to a more modern economy.

There is a rule that all companies operating in Mongolia be listed on its exchange as well as on that of the company’s home country.

The Mongolian Stock Exchange is seeking a major exchange to act as a partner and take over management. The London Stock Exchange is rumored to be battling NASDAQ. If the MSE is run by a major exchange, it will boost credibility and increase liquidity…

There are 12 suitors among major exchanges seeking this partnership. This is a huge catalyst for future share price appreciation.

The King of Cashmere

PM Batbold was the former Minister of Foreign Affairs. He studied politics in Moscow and business in London, and is rumored to be one of the richest men in Mongolia, with interests in Cashmere trading and mining.

He struck me as a smart, serious, pro-capitalist leader.

As I write this, he is making the rounds in Canada. There are some 30 Canadian companies with plans to develop mines or oil in Mongolia.

As I said, there were a lot of powerful moneymen at the reception. I spoke to the Chairman of Eurasia Capital, Alisher Djumanov, who is the second largest investor in Mongolia, who was recently on CNBC talking about investment opportunities in Mongolia.

Too big to play

One of the biggest complaints from the group was that Mongolia is so small. The MSE has a market cap of less than one billion; big investors can’t put their funds to work.

Luckily for us, that’s not a problem… We are small and nimble enough to dance between the legs of the elephants. 

Don’t get me wrong; they are coming — and in droves.

But right now, you can buy stocks in Mongolia with an average price to earnings around four. And I’ll tell you how to do it.

One of my recommendations is up more than 905% this year. Another one is up more than 250% in a month. 

Don’t miss this bull market. It will only happen once as this little-known country in Central Asia is revalued to first-world prices.


Christian DeHaemer
Energy & Capital

P.S. PM Batbold was just on CNBC this morning. Things are really starting to heat up. Word is getting out. Mongolia is the best-performing market this year — not to mention the best performing market of the last ten years, up some 1,800%. And it’s on track to be next year’s winner as well.

If I were you, I wouldn’t wait another day to get in on the investment opportunity unfolding in Mongolia. This story is already on CNBC… It’s only a matter of time before share prices skyrocket.

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