Source: Eurasia Capital               Date: August 17, 2011

The Mongolian economy will maintain strong growth despite a possible crisis initiated by the United States' downgrade from a AAA to AA+ credit rating said Eurasia Capital. The investment bank believes that the S&P's downgrade changes little and described the current panic to sell US debt as a temporary “crisis of confidence.” The firm believes that the impact on Mongolia to be minimal.

“Confidence crisis in the West is unlikely to have an immediate effect on Mongolia,” said Dosbergen Musaev, an strategy analyst at Eurasia Capital . We do not believe the current crisis will degenerate into global downturn akin to 2008, which brought fiscal shock to Mongolia. Commodity prices are to remain strong due to demand from emerging Asian economies. Copper and coal are the core export revenue generators for Mongolia.“

The firm based its predictions on Mongolia's ability to withstand the volatility of the market. This includes an 11 percent fall in the price of copper, a strong indicator of the tugrug's value. The Silk Road Mongolia Index, a listing following international and domestic listings in Mongolia, reported a 6.4 percent decline and a net loss about of approximately USD 2 billion.

Yet, the firm was firm in its belief that Mongolia is isolated enough to be influenced by global economic turmoil. It reported no impact on low free-float and valuation on domestic stocks, and no affect from the events that took place in the US, Europe and the Middle East.

Although Mongolia's resource export-driven economy may be affected,” Musaey commented, “in the short term, we hold a positive long-term outlook. We do not believe the current crisis will lead to the repeat of 2008. Mongolian economy is to continue its breathtaking transformation. We believe that Mongolia's equities market is in an oversold situation and selected stocks are still attractively priced.”