In FTSE Russell’s “Annual Country Classification Review“, it was announced that Mongolia had been removed from the “Frontier Markets Watch List” after the index provider came to the conclusion that the there will be delays in key reforms to the market.
Mongolia was added to the Watch List back in September 2012 after adopting a T+3 settlement cycle on its stock exchange. However, the country failed in its attempt at convincing FTSE Russell to upgrade it after it moved from this T+3 settlement cycle to a pre-funded system in 2015.
The Mongolian Stock Exchange’s recent efforts to introduce a T+2 settlement cycle with a Delivery versus Payment (DvP) mechanism in January 2018 were not convincing enough as FTSE Russell looked at the evidence of how it was progressing and were skeptical that it will be implemented in time. As a result of this delay, Mongolia has subsequently been removed from the Watch List, though dialogue between FTSE Russell and Mongolian authorities will be maintained in order to ascertain the possible re-inclusion to the Watch List in the future.
Despite the bad news, the Mongolian Stock Exchange has been a strong performer since the beginning of the year and has risen by just over 47%. It was also the best performing Frontier Market in September and increased by 17.82%, primarily driven by its booming coal industry.