The Mongolian Stock Exchange (MSE) was founded in 1991 to enable the post-Soviet government to privatise state-owned enterprises. It is located in the old Children’s Cinema, a pink neo-classical building off Sukhbaatar Square. Its founder, Naidansurengiin Zolzhargal, claims direct descent from Chinggis Khan. He studied finance in the USA, and was only 27 when he set up the MSE.  

Originally, every Mongolian citizen born before 31st May 1991 was given vouchers with a total value of 10,000 Tugrugs, so that they could buy shares. The idea was that in a communist state, all wealth is jointly owned by the citizens, so this would allow the Mongolians to get their share. There was also a low level of savings and private property, so the coupon system allowed even nomadic herders, with no possessions other than a ger and some animals, to participate in the stock market. It was intended that 80% of state-ownership would be privatised, but this was later changed to 50%.

The auctioning of shares in state enterprises officially began in February 1992. By October that year, 121 enterprises had been floated on the exchange, and by 1994, it had privatised 476 companies.  During this first phase, trading was only open for two hours, one day per week. In 1995, parliament passed the ‘Law on Securities’, allowing the MSE to operate as a regular stock exchange open to both domestic and foreign investors. Trading is now open between 11.00 and 12.00 every weekday, and traders can do their business on the internet.

The MSE recently signed ‘memoranda of understanding’ with the Korean, Singaporean and Hong Kong Stock Exchanges, to help with its development and attract more foreign investment. The chief executive, Rentsen Sodkhuu, is anxious to put in place more of the checks and balances and shareholder protections for local and overseas investors that older exchanges have developed over centuries. There are currently around 400 companies listed on the MSE, over one fifth of which are involved in mining, the most common sector for foreign investment. Trading by foreign owners has increased six or sevenfold in the past two years.