Templeton Asset Management's fund manager Mark Mobius says Mongolia's banking sector, cashmere, and mining stocks offer good investment potential now, especially if the Chinese government improves the regulatory environment for foreign investors.
"They have to have a basic foreign investment structure in place so that agreements can be made and be honored without having to go back to the authorities," Mobius told the UK Guardian.
Templeton is limited to private equity investments or buying the shares of Mongolian companies listed overseas, because current rules on setting up custodian banks make investing in domestically listed firms impossible, Mobius notes.
Mobius notes that double-digit interest rates and an inevitable consolidation mean Mongolia's banks could make good private equity investments.
In mining investments, Mobius likes export-oriented minerals because they are not subject to domestic price controls. Though he declined to say more about the types of mineral investments being considered, Mobius added that those close to Mongolia’s border with China for which infrastructure is already in place are the most feasible.
As for cashmere, Mobius likes companies that work with big foreign firms for export.
"It has to be oriented towards export, at this stage of the game anyway," he says.
Mongolia’s economic growth is projected to slow from 10.3 percent in 2008 to between 2 percent and 3 percent in 2009 before expanding to 4.4 percent in 2010, the UB Post reports.
The recent decline in commodity prices, coupled with slower economic growth in the People’s Republic of China that takes nearly two thirds of Mongolia’s exports, points to a fall in merchandise exports in 2009.
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