Position Paper on Capital Market Developments
Mongolia is an emerging upper-middle-income country in East Asia with the backbone of the economy being the mining industry. The mining sector accounts for one-fourth of GDP, 31 percent of state revenue, nearly 80 percent of foreign direct investment, and 92 percent of exports. Authorities have made efforts to develop a prudent banking and financial sector to upscale the capital market’s role in recent years. However, the Mongolian capital market is still in its early stages despite increased stock market capitalization and transaction volume. While the Mongolian Stock Exchange (MSE) sees its market capitalization rise, it plays a rather limited role in the broader financial market dominated by commercial banks. Due to amendments to the Banking Law, the five systemically important banks, namely Khan Bank, Trade and Development Bank, Xac Bank, State Bank, and Golomt Bank, became publicly listed companies. This strategic move resulted in a substantial capital infusion of 302.5 billion MNT, according to the MSE. Improving the institutional, regulatory, and supervisory framework remains a key priority in the Mongolian capital market’s development. This Position Paper from AmCham Mongolia presents policy recommendations in a condensed form rather than a comprehensive sector overview.