While political uncertainty dominates headlines, a quieter crisis is unfolding in the background. Mongolia’s once-resilient stock market is slipping. After nearly a decade of steady gains, market value is now in retreat.

😵‍💫 Will the Trend Break?

Since 2004, Mongolia’s stock market has grown by an average of 54.4% annually. Over the past 20 years, it declined in only five of them and has enjoyed uninterrupted growth since 2016. But that upward trajectory is now showing signs of strain.

• 🤔 What Changed? In January 2024, the market capitalization reached ₮13 trillion. Since then, it has steadily declined, shrinking by ₮914 billion to hover around ₮12 trillion, or approximately $3.4 billion.  

⛓️‍💥 Trading Activity Weakens

A major factor behind the decline is reduced trading activity. In March, the market hit its lowest point for the year. Only 109 public companies saw trading activity, a drop of 11% from February. Secondary market trading volume also fell by 12.3%, indicating broad investor hesitation.

• 🎡 Too Much Weight on Too Few Players: The market’s vulnerability is further amplified by overconcentration. Currently, 79.5% of market capitalization is held by the TOP-20 companies, with 54.8% concentrated in just the TOP-5. This skew means market value is heavily influenced by a small group of players, increasing volatility.
• 🥶 Billions in Value Lost: Two of the most influential public companies, Khan Bank (KHAN) and Tavan Tolgoi (TTL), have seen their valuations fall by 7.5% and 14.9%, respectively, since the beginning of the year. These losses are echoed across the board, with most companies experiencing value erosion.

⁇ Government Intervention: A Real Fix?

Originally intended to stimulate market activity, the government resumed domestic securities trading last month. A similar move 10 years ago successfully boosted daily trading volumes from ₮10–₮20 million to ₮1.5 billion. However, it’s too early to say whether the current initiative will deliver comparable results.

•  An IPO Chill and Fading Foreign Interest: Adding to the pressure, the IPO pipeline has cooled, and the initial excitement around open-ended bonds has diminished. At the same time, foreign investors now account for just 1%–2% of overall trading, a troubling sign for diversification and long-term growth.

Finally… If Mongolia is to reinvigorate its capital markets, it must create a stronger investment environment with well-designed incentives. That includes boosting transparency, encouraging innovation, and widening investor participation. Only then can the market reclaim its growth momentum—and possibly avoid ending a nine-year winning streak.