We were lucky to have Zolbayar Enkhbaatar act as our guide to the Mongolian investing environment. Rising star and founder of Capital Markets Mongolia (CMM), Zolbayar runs the premier English language Mongolian financial news site. We highly recommend you follow CMM on LinkedIn and subscribe to their weekly newsletter to stay up to date with the latest financial news in Mongolia.
Below, we ask Zolbayar our top of mind questions about investing in Mongolia. We hope you enjoy!
From your perspective, what are the key drivers of Mongolia’s investment ecosystem?
Mongolia's investment ecosystem has been shaped by various key drivers over the past decade.
Natural resources: Mongolia is rich in natural resources, especially coal, copper, and gold. The mining sector has been a critical driver of economic growth and foreign direct investment (FDI).
More educated workforce: Mongolia has a relatively young population, with a median age of around 27 years. This has provided a dynamic and adaptable workforce. On the other hand, young Mongolians are highly educated and digitally literate which leads to easier technology adaptation. I think this will be the biggest and most important driver in the next decade.
Banking & Fintech: Beyond mining, the banking and fintech sectors have been among the fastest-growing industries in Mongolia, attracting significant foreign investment. Non-banking financial institutions, spurred by advancements in fintech, achieved a nearly 25% CAGR in revenue from 2014 to 2023. Now, some of the biggest fintech companies are expanding into other markets [Central Asia].
Capital Markets: Recent developments in Mongolia's capital markets are transforming investment opportunities in the country. New investment products, including exchange-traded funds (ETFs), mutual funds, private bonds on the OTC market, green bonds, and the introduction of the first-ever municipal bonds, are expanding the range of options available to investors. These innovations are enhancing market diversity, increasing liquidity, and attracting a broader base of domestic and international investors, thereby strengthening Mongolia's financial ecosystem.
What makes you excited about investing in Mongolia?
Simply the promise of a young, educated new generation.
What key themes do you see shaping the investing environment today and in the near future?
New Coalition Government:
Last month’s parliamentary election in Mongolia resulted in the formation of a new coalition government, consisting of agreements between three major political parties. This development may lead to decisive actions on critical issues and the rapid advancement of significant projects [for example, value-add industrial hubs]. The coalition's unified stance could facilitate swift decision-making and the implementation of key initiatives.
Uranium Deal with France:
Another noteworthy development is the ongoing uranium deal with France. If the negotiations proceed smoothly and efficiently, this agreement has the potential to significantly boost Mongolia’s FDI and attract more European investors. The successful completion of this deal could enhance Mongolia's standing in the global energy market and further integrate it into the European investment landscape.
What misconceptions do you see foreigners having about investing in Mongolia?
Russia controls Mongolia. I think that’s the biggest misconception. Russia certainly tries to interfere in Mongolia. However, aside from oil and energy, its overall impact on the Mongolian market is limited. Russian companies are relatively few in number within Mongolia, and language barriers—many Mongolians do not speak Russian—further restrict the extent of Russian influence. Therefore, while Russia may attempt to exert some degree of influence, it does not control Mongolia's market or economy.
What part of the investment ecosystem is lacking in Mongolia?
Lack of institutional investors. The limited presence of institutional investors, such as pension funds, insurance companies, and large investment firms, poses challenges for exiting major investments and can lead to constrained market liquidity. The underdevelopment of this segment affects the ability to facilitate large-scale transactions and provides fewer options for investors seeking to realize returns on their investments.
What advice do you have for foreign investors interested in entering the Mongolian market?
Please, work with local, professional advisory firms and legal firms.
Writer’s note: Follow CMM’s newsletter!
Outside of metals and mining, where do opportunities exist?
Mongolian companies, mostly fintech and food, that are expanding into the region [Central Asia]
Agriculture (agritech)
Debt market
What interest in the country do you see presently from international investors?
Impact Investing: Mongolia presents a wealth of opportunities for impact investors. The country's focus on sustainable development and social impact aligns well with the goals of impact investing. With its potential for significant positive social and environmental outcomes, Mongolia is an attractive destination for investors looking to make a meaningful impact.
Energy Sector: The energy sector, particularly critical minerals resources, is drawing considerable interest from foreign investors. Mongolia's rich deposits of critical minerals, which are essential for various high-tech and green technologies, have become a focal point for international investment. This interest is driven by the global demand for these resources and Mongolia's strategic position in the global supply chain.
Are there any good examples of Mongolian business success stories?
One notable success story in Mongolia's business landscape is Invescore (MSE: INV). As a leading player in the non-banking financial institution (NBFI) sector, Invescore has attracted significant foreign investment. The company went public with an IPO in 2019, and since then, its stock price has increased by more than fourfold. Demonstrating its growth and strategic vision, Invescore has successfully expanded into Kyrgyzstan and is now entering the Kazakhstan market.
Writer's note: we had an interview with Invescore Asset Management's CEO. Read it here!
What are your travel tips for folks visiting? Where do you recommend people visit?
Gobi. Gobi. Gobi. That’s it.
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