Source: Financial Times                           Date: 08 September, 2011

Although Mongolia's resources have become the trendy new investment, investors would be wise to heed caution. Analysis of the IPOs operating in Mongolia show signs of struggle.

Tavan Tolgoi's entrance on the London, Hong Kong, and Mongolian markets will be a true test of Mongolia's promise. If shares do well, investors who have seen shaky post-IPO performance by Mongolian linked companies can maybe relax.

Although Mongolia has been grandstanded for its untapped mining potential, many of the companies who have begun operation in Mongolia have not fared so well on the market. Only one of the three companies listed on the Hong Kong exchange with substantial operations in Mongolia has seen share prices rise.

Mongolian Mining Corporation (MMC), a wholly-owned Mongolian mining firm,  is the best preview investors have of how a Tavan Tolgoi might fare. Investors were initially hesitant to gamble on Mongolia, but the success of MMC seems to have assured some.

“MMC is probably three to four years further advanced relative to [Tavan Tolgoi], so we think there’s a blueprint for [Tavan]   in MMC,” said a Hong Kong-based analyst. “I think the valuation will read through”

Tavan Tolgoi Erdenes, a state-owned mining firm, is expected to open its IPOs in 2012.