While Prime Minister S. Batbold said in New York on
Monday that the London Stock Exchange (LSE) was the front runner in the race to
be selected to restructure the Mongolian Stock Exchange, developments in
Ulaanbaatar cast doubts on the entire process of selection. On Tuesday the
State Property Committee (SPC) ordered the total cancellation of the tender process,
without assigning any reason, but the next day it told media that the bids for
the tender are being processed, without clarifying the contradiction or stating
just where matters stood. There is no information if the Prime Minister has
been kept informed.

There is speculation that the Government and the SPC hold
different positions on the issue and that the sequence of events reflects this
difference. However, there can be no argument that the MSE has to be
restructured and its capacity substantially increased. At present the MSE building
in the city center is worth more than its daily transactions. The benefits of
the anticipated mining boom can be felt only if the domestic capital market is
capable of handling much more money than at present and of trading in
international shares.

The choice of the company to overhaul and restructure the
MSE is important for the right branding also. If a universally respected and
internationally reputable entity is given the responsibility, the credibility
of the new MSE will rise automatically. Can it be that the Prime Minister
recognizes this and the SPC resents it? 
Of course, the chosen company will make a profit from its contract but
how otherwise will companies desirous of working in Mongolia raise capital and
how will companies registered in Mongolia find investors? Foreign management
has both bad and good aspects, but with our lack of experience for reasons of
history, what option does Mongolia have? The country’s future is in mining and
this cannot develop without a strong and vibrant local capital market.