I’ll admit, even I was surprised.
When I think about Asia growth and investment opportunities, places like Singapore, Thailand, Vietnam, and even the Philippines come to mind. But lately, in my regular discussions with key Asia contacts– brokers, sovereign wealth fund analysts, etc., one place keeps coming up again and again.
Mongolia is one of the largest, most resource rich countries in the world with a population smaller than Panama– that’s a lower population density than Wyoming. And with such a low population to support with its abundant resources, the country has the good fortune of being sandwiched in between resource-hungry China and Russia.
Many of my friends and colleagues who are based in Asia make routine trips to Mongolia and describe it as the Wild West– young, fast-paced, and full of opportunities with neither the benefits nor restrictions of established structure.
My old friend Christine Verone, who has an uncanny 6th sense about Asian markets, recently sent me this in an email:
I’m not buying in China right now because I’m not seeing the right indications from the government yet. I will let you know when things change and we can start making money in Shanghai again. In the meantime I am buying in Mongolia as fast as possible.
The stock exchange there is among the smallest in the world; it had a 68% run-up but has since rebalanced to 50% below that level, and there are some fantastic buys. Aside from the broad “metals and mining” sector which is all most people know about Mongolia, there are many plays to found in uranium, cashmere, agriculture… and even new changes in toll roads and water.
It can be seen as another way to play China seeing as nearly 80% of their exports are to the mainland, and an absolute tidal wave of Chinese money is being invested in Mongolia– new infrastructure, luxury hotels, telecom deals, real estate developments, etc.
Everyone from American Express to Ericsson to ZTE is establishing themselves in Mongolia– even Blackberry is launching service in the country… all because a flood of investment dollars and joint venture projects to tap natural resource wealth is creating legitimate, overwhelming demand for services.
I am also looking at clues in demographics– population trends are good predictors for change, and Mongolia is a country that is dominated by young people: 70% of the population is under the age of 35. This means that they move extraordinarily quickly and are hungry to get deals done.
The stock exchange was started in the 1990s by a 26-year old entrepreneur– this culture is full of people who want to make things happen.
In contrast to my time working in Switzerland in private wealth management, the Mongols move at light speed. If I were you, I would get this out to your community to see if there’s any interest… and I would suggest two things:
1) The Mongolian Stock Exchange is sitting on multi-year lows; the entire market capitalization is less than $250 million, and daily turnover is often less than $1 million… so institutional capital tends to move prices in a big way.
It’s fairly transparent for foreign investors to get in to this market– which is exactly what I am doing right now. My guess is that there will be a Mongolia ETF very soon once the market has tripled and you start hearing about it on CNBC.
Too late in my book.
2) I know you have a lot of expats who read your letter and are looking for a place to go… I would highly suggest Mongolia– if you have the means and are looking for adventure, Mongolia is a land of opportunity.
Mongolian entrepreneurs are itching to do JV deals with subject matter experts to bring new services to the country… and there’s no such thing as ‘paying your dues’ in Mongolia. You show up, and if you’re smart, you move to the top of the food chain immediately.”
Simon again. What Christine says rings absolutely true… to me, the biggest benefit of living the expatriate lifestyle isn’t the cultural adventure or cheap cost of living– it’s being able to immediately plug in to the movers and shakers who can get deals done and make things happen.
In New York City, San Francisco, LA, etc., it can take years to clutch and claw your way up the ladder and get noticed. Around the world, though, in places like Colombia, Mongolia, Palau, and Panama, it’s possible to become a player very quickly.
Before moving anywhere, though, it’s always a good idea to see the country first hand and scout the opportunities for yourself on the ground. If you’re interested in Mongolia, consider checking out the annual Mongol Rally which takes place in September each year… there is no more unique way to see a country in my opinion.
Let me know if you want to hear more about investing in or moving to Mongolia, and I will do my best to answer your questions.