Punters On Steppes Of Mongolia 

Eric Ellis Ulan Bator 

04/19/1996 

IT WOULDN'T take that big a cheque to corner the Mongolian Stock Exchange. With a capitalisation of around $150 million, the world's newest frontier market clearly has some more emerging to do. Indeed, Kerry Packer is worth more than the entire Mongolian economy.

But emerging it is and if enthusiasm is any guide, the Dr Livingstones of the investment world will be exploring Ulan Bator in no time.

They'd better have a strong stomach. The day the AFR called in, the smell of old mutton wafted through the trading floor, thanks to a sheep's head boiling away for lunch in the exchange's kitchen.

"We want to have modernisation in Mongolia but we also want to keep our traditions," says exchange chief executive Songiny Enkhbaatar.

A 38-year-old, Moscow-trained statistical economist, Mr Enkhbaatar is learning quickly on the job how his market functions. A well-thumbed copy of a basic American text How The Stock Market Works lies on his office desk.

Housed in a mock Belle Epoque building redolent of Tsarist Russia, the exchange's symbolic location on Suhbaatar Square in central Ulan Bator indicates reform is at the heart of post-communist thinking here.

With Austrian aid, the Government spent $US4 million renovating the pink children's theatre on the square into a grand home.

The exchange had its beginnings in 1991, a key to the privatisation program that saw every Mongolian receive "vouchers" that could be traded for shares in former State-owned companies. But it took another four years for the exchange to formally open its doors and in September last year, some 28 stockbrokers took their seats to trade the 470 listed companies.

The exchange is fully computerised and its floor wouldn't be out of place in Sydney or Singapore, on which it has been modelled.

Trading since opening has been brisk by Mongolian standards and though the general index has been mostly even, some stocks have doubled.

Some 90,000 Mongolians have opened trading accounts since September and can watch proceedings by computer and modem link from offices across the Mongolian steppe.

The voucher system of privatisation put shares in every citizen's hands and even today, Mongolia effectively has 1.2 million shareholders through their exchangeable vouchers, one of the highest ownership ratios in the world.

Enkhbaatar says his exchange has not yet experienced such "exotic behaviour" as takeover bids or dawn raids. As for good prospects, Mongolia's temperatures of as low as minus 40 might get punters keen on stocks like the textile groups Gobi and the Mongolian Wool Company, while their taste for hard drink suggests the Arkhi Vodka Factory.

But this correspondent reckons it's difficult to go past the former State-owned Ulan Bator Hotel, a building surely designed by the same team that built Lenin's tomb in Moscow.

While the architecture or the hotel's near-inedible food won't get punters flocking to the "UB", the $US18 a minute international phone charges might.

You could dash across the Suhbaatar Square after putting the phone down to place a trade, insider dealing Mongolian-style.

ends