The year 2023, which marks the 32nd anniversary of the establishment of the capital market in Mongolia and the establishment of the Mongolian Stock Exchange, has been a remarkable year for the financial sector. Precisely, the Parliament of Mongolia approved the Law on Mining Products Exchange, effective June 30, 2023, to organize trading of commodities in an open, fair and transparent manner, to create opportunities for real market prices to be established, and to increase the industry's contribution to the country's economic growth. Accordingly, MSE has been authorized to carry out mining commodities exchange operations by the FRC's resolution No. 385 dated June 30, 2023.
Highlights of the first half year of 2023:
- Newly adopted regulations:
As part of the preparatory work to ensure the implementation of the Law on Mining Products Exchange, which came into effect on June 30, 2023, the Mongolian Stock Exchange has drafted five rules to regulate the 11 relations specified in the law and has been granted a license by the Financial Regulatory Commission to implement the regulations.
As stated above, "Rules for trading and settlement of commodities", "Rules for accrediting exchange market participants and regulating their activities", "Membership rules for commodities trading", "Rules for establishing and enforcing standards for contracts of coal trading," and "Surveillance rules for commodities trading" came into effect on June 30, 2023.
- Securities trading:
In the first half of 2023, the TOP-20 index, which is the main indicator determining the trend of the domestic securities market, reached 40,386.51 points, while the minimum indicator was 35,154.41 points and the average indicator was 37,315.18 points.
As of June 30, 2023, the market capitalization reached 10.99 trillion MNT, an increase of 6.15 trillion MNT, or 127.26 percent, from the same period of the previous year. This figure is 4.2 trillion MNT, or 61.86 percent higher than at the beginning of the year.
As for securities trading, in the first half of 2023, a total of 125 trading sessions worth 513 billion MNT were made. Specifically, 855.2 million shares of 140 joint-stock companies were traded for 429.8 billion MNT in the primary and secondary markets; 428,000 securities were traded in the primary and secondary markets of asset-backed securities for 42.2 billion MNT; 5.5 million units were traded in the secondary market of investment funds for 3.4 billion MNT; and 374,000 bonds were traded for 37.4 billion MNT in the primary and secondary markets of the company's bonds. During the reporting period, an average of 6.9 million securities were traded for 4.1 billion MNT per day.
- Coal trading:
Until the Law on Mining Products Exchange comes into force, the Government of Mongolia has been instructed to organize coal trading through the Mongolian Stock Exchange and “Rules on Electronic Trading of Export Coal” approved by Resolution No. 466 of the Government of Mongolia dated December 14, 2022. Within the framework of this rule, the “Mongolian Stock Exchange” JSC has organized 54 online coal trading sessions and traded a total of 3.11 million tons of coal for 1.3 trillion MNT. For instance:
- Erdenes Tavantolgoi" JSC’s 1,152,000 tons of coking coal with medium volatile matter for 564 billion MNT, 1,043,200 tons of 1/3 coking coal for 325.4 billion MNT and 371,200 tons of thermal coal for 87.7 billion MNT;
- "Tavantolgoi" JSC’s 236,800 tons of coking coal with medium volatile matter for 148.1 billion MNT;
- "Energy Resources" LLC’s 243,200 tons of washed coking coal for 162.05 billion MNT;
- "Khangad Exploration" LLC’s 64,000 tons of semi-soft coking coal for 26.7 billion MNT traded, respectively.
- New products:
In the first half of 2023, as part of the amendments to the Banking Law, Khan Bank, Trade and Development Bank, and Khas Bank committed to becoming public companies before June 30, 2023, and these banks offered their shares to the public and raised a total of 302.5 billion MNT successfully. In addition to this, the national enterprise "Gazar Shim Uildver" JSC has successfully raised 10.5 billion MNT by offering its shares to the public through MSE.
Also, two more companies offered asset-backed securities to the market. In the first half of this year, the asset-backed securities of "Bers ABS Plus TZK" LLC with a value of 9 billion MNT, and "Bichil ABS Plus TZK" LLC with a value of 20 billion MNT were offered to the market and successfully traded in the primary market.
In addition, the primary market trading of bonds worth 8.5 billion MNT of "Sendly NBFI" JSC, 10.0 billion MNT of the 3rd tranche of "Invescore NBFI" JSC, and 8 billion MNT of "Business Investment Development NBFI" LLC successfully organized and fulfilled 100% of orders on the first day of trading.
- Financial performance of MSE:
In the first half of 2023, the Mongolian Stock Exchange JSC recorded a total income of 5.0 billion MNT from operations and recognized expenses of 2.6 billion MNT in the financial statement, resulting in a net profit before tax of 2.4 billion MNT. The main economic indicator and target level for 2023 is to fully cover the total operating expenses with the company's operating income and bring the cost per 1 MNT of sales revenue to 0.70 MNT, and this indicator had a performance of 0.51 MNT in the first half of the year.
During the reporting period, the total taxes and fees of MNT 429.3 million were paid to the State budget.
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