Mongolian Securities Clearing House and Central Depository Co., Ltd

Highlights Total area: 1,566,500 sq.km Population: 2.7 million Capital city: Ulaanbaatar Governance: parliamentary republic Monetary unit: tugrug (1$=1420T) GDP: US$ 2,100 per capital Economy: market economy, centered on mining and agriculture Climate: four seasoned Sunshine: 200 days Temperature: -31C – 50C (in Jan. in Gobi) Mongolia

Economy grew in 2008 GDP Growth at constant price (in thousand US Dollars ) Source: National Office of Statistics

What is the impact of the financial crisis on Mongolia? Impact through:  Drop in copper price  Possible delays in the development of mining operation because of tightened international financial condition  Limited private sector exposure to foreign financial resources  Shortage on foreign currency (US Dollar) The Current Economic Situation State budget deficit In June 2009, the Bank of Mongolia (BoM) reduced its policy rate to 11.5%. Banks froze its lending. Exchange rate, tugrug has fallen against US Dollar.. High inflation in Jan 2009 (fuel and food price led to record high inflation- 33.7%)

Mining contribution is substantial in Mongolia’s export revenue

Global price of Mongolia’s main exports have fallen back to the 2004 levels

Way to Development The 1997 Law opened - foreign direct investment (FDI) in mineral and petroleum exploration. The exploration has resulted in the discovery of world class mineral projects. Proven and probable reserves of Oyu Tolgoi million tonnes. Containing: grade percent of: copper % gold g/t recoverable copper billion pounds gold million ounces

Securities market in Mongolia 1991 – Establishment of Mongolian Stock Exchange by the decision of Government. A voucher worth of 10,000 tugrugs was given to every citizen for exchange of shares of newly privatized state owned enterprises – Establishment of secondary market and 29 broker firms were privatized. Securities depository and settlement operation was a part of the MSE until 2003.

Securities market in Mongolia June 2009 Market capitalization in millions of US dollar percentage in GDP % % % % Index TOP 20 Total 2, , , , , , ,493.2

Market Participants  Mongolian Stock Exchange - fully state owned joint stock company  Securities Clearing House and Central Depository – state owned LLC  Total of 376 issuing companies. since 2000, delisted - 81 companies newly added - 48 companies  Securities companies - 44  Broker, dealers - 30  Underwriters – 14  with foreign investment - 12  Investors – 441,124  Individuals - 440,420; foreign – 576  Entities - 704; foreign - 63

100% state owned “Securities Clearing House and Central Depository” Co., Ltd Features of MSCH&CD: In 2003, MSCH&CD was established 100% dematerialized securities “Trade for trade” settlement system Main operation of MSCH&CD: Securities safe-keeping Registration of stocks and bonds Book-entry transfer of securities and cash Securities settlement and payment according to MSE trade execution and non-exchange transaction

Income and Expense Transaction  4.7 bln shares with market capitalization of mln USD are safe kept at the Central Depository by June  By the end of 2008, volume of bond was 900,000 shares, since then this number hasn’t been changed.

Trade information  Government bond was released in 2007, for financing the contraction of public housing. It influenced in the increase of income transaction.  In 2007, the fund income transaction reached million USD, but in 2008, the value of income transaction reduced to 74.6 million USD.

Action taken by the House Computer linkage with securities companies  To reduce manual work and cost  To reduce operational risks Media release  To improve knowledge on securities market among public  To provide fair and fast information Organizing seminars  Organize trainings among interested parties  Provide latest updates promptly and safely

Presentation by: Mendjargal Orosoo Researcher, Settlement and Risk Management Department MSCH&CD Co., Ltd Contact address: Sukhbaatar Square – 2 Ulaanbaatar, Mongolia Phone: 976 – Facsimile: Website: THANK YOU FOR YOUR ATTENTION