The Executive Director of the Mongolian
Stock Exchange (MSE), R.Sodkhuu, talks to our journalist.

Foreign
teams have placed bids to be selected to manage the MSE management. Cannot we
do without foreign management?
Mongolians can do the work. We shall cooperate with the foreign team that wins
the tender bid but this may be for only about two years. After that, a national
team will manage the MSE. We will not permanently hand over the MSE to any
foreign bidder. Asian countries such as South Korea and Kazakhstan have managed
their Stock Exchanges quite well, and so can we. We want to have a stock
exchange that can trade in shares of mineral resources and metal companies in
the world as in the Toronto, Australia and London exchanges.

Will a
foreign team be able to restructure the MSE in such a short period?
They are actually not very keen. The Asian exchanges feel threatened that MSE
can take away their business and control world trade in copper, gold and coal
shares. When we announced the tender, exchanges in Toronto and Australia
submitted bids, but the Hong Kong Stock Exchange did not, as they felt that
they could not afford the MSE getting bigger and stronger. With its enormous
natural resources, Mongolia can certainly expect to be the home of an Asian
mineral resources financial center. So I want the present selection should
favor a team that will develop the MSE towards such a goal. Foreigners are
generally unwilling to train Mongolian specialists who, they fear, will replace
them in controlling the capital market.

How far
have we come in developing the capital market?
We are just waiting for distribution of the homeland allowance among citizens.
Once they have the cash to buy shares they will grab the mining companies.
Foreigners buy shares in these companies at high prices because this is
profitable.

But very
little of our capital is raised at the capital market?
It is true that banks provide 95% of the investment capital and only 5% is
raised at the MSE. The crucial factor is that there has been very little
investment in the capital market. Our dependence on banks has been traditional.
This may not be good as large banks tend to make money for themselves by buying
mines shares instead of laying stress on basic functions such as giving loans.
This is what led to the banking crisis.

How much
do Mongolians understand of how a capital market works?
Common citizens have become much more knowledgeable. People who knew little
five years ago  when I took over as
Director now understand that buying well chosen shares is much better than
putting cash into savings and loan cooperatives.