Bunhill: Mongolia grabs a share of the action

OUTER MONGOLIA. Home to a couple of million sheep-herding nomads roaming across a country four times the size of France, and once the seat of Ghengis Khan's terrifying empire. An unlikely place for a financial market, you would have thought.

But with half an eye open as you cross the main square in Ulan Bator, you might just notice a shabby sign marking the dilapidated entrance to the Mongolian stock exchange.

Set up with money from the Asian Development Bank and with two Harvard professors training its young brokers, the market opened in February. As yet, it trades only twice a week in 40 quoted companies. But enthusiasm abounds: no fewer than 470 state companies are due to be privatised, and every one of the population is supposed to have been given coupons worth 6,000 to 7,000 tugriks (dollars 175 at the official rate, dollars 35 on the black market) with which to buy stock. In reality, few have received them. Not surprising when you consider that the average family 'moves tent' 10 times a year.

Once invested, the coupons cannot be traded for another holding. Best then to put the coupon where it will do well - with the Mongolian Vodka Company, easily the most valuable stock so far.

There are 29 brokers trading, but only seven are based in Ulan Bator. The rest are spread around the country's 18 regions, with hundreds of kilometres of uninhabited steppe, mountain and desert between them and the city.

Somehow, orders make their way through the drooping telephone lines that criss-cross the land. Settlement is by post. Neither system could be described as reliable, but ambitious plans are afoot in Mongolia to get all the brokerages computerised and permanently linked by modem and phone lines. However, quite how many of the country's 'arats', or herdspeople, will switch their minds from storing dried yak curd for the winter to watching share price movements remains to be seen.

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