James Passin Bullish on Mongolian Stock Market

By , 26 November, 2009, 2 Comments

Today, while going through some articles on Mongolia, I ran across an article that happened to cover the Mongolian stock market by a stock market guru named James Passin.  It was a lucky find as the article mostly talked about Berrylium.  Anyway, please read on.

As you will find, James is very bullish on the local Mongolian stock market.

Source:

Mongolian Stock Market Overview

TER: Any other regional international plays that you can discuss with us?

JP: Ivanhoe Mines Ltd. (NYSE:IVN, TSX:IVN) , the Canadian exploration company, finally executed an agreement with the Mongolian government with respect to the development of Oyu Tolgoi, the world’s largest undeveloped copper mine. This is a massive mine that will generate $5 billion of revenue per year for over 50 years. While this is a positive development of Ivanhoe, a stock that we’ve been trading from the long side all year, it will be much bigger story for the Mongolian stock market.

Mongolia GDP is only about $5 billion, so Oyu Tolgoi, or OT as the mine is called, will transform the prospects for employment and per capita GDP growth. A great wall of domestic liquidity will support the local stock market, creating a new bull market which will last for decades. The local stock market currently has depressed valuation and almost zero liquidity. Mongolia has structural similarities to other emerging markets that started out with very low market capitalizations, such Vietnam or the smaller Gulf states. There are 24 mineral projects that have been deemed strategic by the Mongolian government and that represent potential sources of commodity exports. The Ivanhoe deal marks the beginning of the Mongolian mining boom and I think the most leveraged long-term way to play this mining boom is through the local stock market.

TER: How does an individual investor play the boom through the Mongolian stock market?

JP: There are no restrictions on foreign ownership of stock and the currency is freely exchangeable. It’s easy to open up a fund brokerage account. The hard part is finding shares to buy because the market is very thinly traded. It’s possible to get a small amount of stock from time to time, although the entire market capitalization is only $500 million and the free float is much smaller. I think that it’s certainly worth taking time to do a little bit of research and look at some of the larger stocks that are listed on the Mongolian stock exchange.

TER: You mentioned there are 24 mineral projects and the big one is Ivanhoe with copper. With the recession worldwide, would we expect to see any return from anything in Mongolia for the next five years?

JP: The copper prices had a massive recovery. OT would be profitable at current copper prices. And Mongolia has other commodities, including coal, uranium, and iron ore.

TER: Thanks James. Interesting to talk with you, as always.

Describing him as “the Indiana Jones of frontier stock markets,” the Financial Times praises James Passin for visiting “rough, difficult places…rather than swanning around the more comfortable nightclubs…” A graduate of St. John’s College, James majored in philosophy and classical literature. He is a former editor and research director at investment newsletter Taipan. Passin co-founded and manages Firebird Global Fund and Firebird Global Fund II. James serves on the Board of Directors of National Investment Bank of Mongolia; Vangold Resources, Ltd., a company listed on the Toronto Venture Exchange; Sharyn Gol, a coal producer listed on the Mongolian Stock Exchange; and Maghreb Minerals PLC, a mineral exploration company listed on AIM. He also serves as a director of several private, venture-stage international resource companies.

DISCLOSURE:
1) Karen Roche, of The Gold Report, conducted this interview. She personally and/or her family own none of the companies mentioned in this interview.
2) The following companies mentioned in the interview are sponsors of The Gold Report: Mega Uranium (TSX:MGA), Vangold Resources Ltd. (VAN:TSX.V)
3) James Passin – I personally and/or my family have direct or indirect exposure to the following companies mentioned in this interview: UEX Corp., Mega Uranium Ltd., IBC Advanced Alloys.

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