State Property Committee cancels Stock Exchange Tender, retracts order next day

While Prime Minister S. Batbold said in New York on Monday that the London Stock Exchange (LSE) was the front runner in the race to be selected to restructure the Mongolian Stock Exchange, developments in Ulaanbaatar cast doubts on the entire process of selection. On Tuesday the State Property Committee (SPC) ordered the total cancellation of the tender process, without assigning any reason, but the next day it told media that the bids for the tender are being processed, without clarifying the contradiction or stating just where matters stood. There is no information if the Prime Minister has been kept informed, or if his statement had led to the order, or if his intervention later led to its retraction.
There is speculation that the Government and the SPC hold different positions on the issue and that the sequence of events reflects this difference. However, there can be no argument that the MSE has to be restructured and its capacity substantially increased. At present the MSE building in the city center is worth more than the volume of its daily transactions. The benefits of the anticipated mining boom can be felt only if the domestic capital market is capable of handling much more money than at present and of trading in international shares.
The choice of the company to overhaul and restructure the MSE is important for the right branding also. If a universally respected and internationally reputable entity is given the responsibility, the credibility of the new MSE will rise automatically. Can it be that the Prime Minister recognizes this and the SPC resents it?  Of course, the chosen company will make a profit from its contract but how otherwise will companies desirous of working in Mongolia raise capital and how will companies registered in Mongolia find investors? Foreign management has both bad and good aspects, but with its lack of experience for reasons of history, what option does Mongolia have? The country’s future is in mining and this cannot develop without a strong and vibrant local capital market.
Maybe it can be arranged that a foreign company does not have total control of the management at the new MSE. If local skills develop fast, there is no reason why Mongolians should not manage it by themselves before long.
Source: English.News.mn
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