Although Mongolia faces several fundamental issues that need to be corrected, opportunities are gradually increasing especially given the recovery of financial markets in Asia and commodity markets in the world. Politics remains the major concern for Mongolia. But, it looks like good portion of bad news are already discounted in the share prices. However, negotiation of OT and Mongolian Government will be the key concern for this week and next. In case the negotiation does not go well(although that is not our main scenario), there should be more downside to Mongolian related companies share prices. Speaking of sectors, we recommend investors to selectively pick up heavily sold exploration companies with decent valuation and strategy and some small real estate related companies who are benefiting from resilient property market. However, keep an eye on investment opportunities in banking and telecom sector as well. Although they are totally private, some of them need capital and expertise from international investors.
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