Mongolian Market Updates | March 18th

🌄 Good morning!

This week, the “Ulaanbaatar City Bond” expenditure report was released. Please find the details of the bond's expenditure in this week's newsletter.

🗞️ In this week’s newsletter:

•  Investors Guide to Mongolia: Bank Equities

• CMM Market Updates

• Market News

🟣 Investors Guide to Mongolia: Bank Equities

🟣 Introducing the Investor’s Guide to Mongolia

😎 We are thrilled to announce the launch of our new research series, Investor’s Guide to Mongolia, providing key insights into the country’s growing investment landscape. Our first edition explores Mongolian Bank Equities, highlighting leading banks’ performance, sector growth, and future opportunities following an expanding economy.

❓ What’s included in this report:

📈 Undervalued Bank Equities – Despite strong performance since their public listings in 2022-2023, top banks remain undervalued due to limited domestic market opportunities. International listings are expected in the coming years.

🪙 Stronger Banking Sector – Credit grew at a 24.9% CAGR (’20–’24), while non-performing loans fell to a decade-low of 5%. In 2024, major banks secured credit rating upgrades, driving increased investor confidence.

✅ Positive Economic Outlook – Mongolia’s economy is rebounding, with nominal GDP at US$23 billions in 2024 and a projected 7% growth in 2025. Mining and new government-backed projects are set to fuel further expansion.

Click here for more on the forum.

🟣 CMM Market Update

Last year, ₮500 billion was raised from the domestic market through the first municipal "Ulaanbaatar City Bond." The allocation of the bond funds was planned as follows:

• Buuruljuut Power Plant – A 300 MW thermal power plant that supplies electricity to Ulaanbaatar. It will operate based on Buuruljuut’s brown coal reserves.

• Tuul-1 Wastewater Collector Pipeline – This pipeline is essential for operating the Central Wastewater Treatment Plant. Once completed and operational, it will reduce the pipeline load by 35%.

• Ulaanbaatar Road Development – Construction and improvement of 73.1 km of main and secondary roads and drainage systems in 27 locations across Ulaanbaatar.

Bond Utilization as of Q1 2025:

As of the first quarter of 2025, the only fully funded project is the Buuruljuut Power Plant. Meanwhile, the Tuul-1 collector facility is still awaiting ₮28 billion in funding.

🟣 CMM Market Update

This week, Fitch Ratings assigned a “B+/Stable” credit rating to Golomt Bank. The key factors behind this rating include:

• Systemic Importance – Golomt Bank accounts for 20% of total bank deposits, making it a systemically important bank. Authorities tend to prioritize supporting larger banks over smaller ones.

• Stable Market Position – The bank’s market position remains stable, and its financial performance has significantly improved in recent years.

• Favorable Banking Environment – The strong growth of the mining sector and political stability in Mongolia provide a positive outlook for the banking sector in the medium term.

• Loan Portfolio Growth – Golomt Bank’s loan portfolio grew by 54% over the past years, significantly higher than the banking sector's 35% average loan growth.

• Improved Loan Quality – In 2021, 12% of the bank’s loan portfolio was classified as high-risk (Tier 3), but this figure decreased to 5% last year, reflecting improved asset quality.

🏛️ Market News

• Compared to the performance plan at the time of the IPO, Golomt Bank JSC [MSE:GLMT] outperformed with a 160% increase, the highest level. Following that, Khan Bank JSC [MSE:KHAN] outperformed by 62%.

• Most trades on the Mongolian Stock Exchange are in the first category, accounting for 67.2%, while the second category makes up 5.5%, the third category 0.8%, and portfolio trading 26.6%. However, when looking at the number of listed companies in these categories, there are 27 companies in the first category, 49 in the second, and 96 in the third. This shows that over half of the companies listed on the exchange are in an inactive trading state.

🟣CMM Services

Capital Markets Mongolia (CMM) specializes in providing strategic advisory to public companies on optimizing investor relations (IR) and advising on upcoming IPOs, bond issuances, and effective participation in the capital markets with a focus on efficiency and reputation. Additionally, we undertake market research and provide financial PR services.