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The Market Is Ignoring One of the World’s Greatest Growth Stories

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How we’ll set ourselves up to profit from one company taking advantage
In the center of Ulaanbaatar, just a few hundred yards away from an enormous statue of Genghis Khan, sits one of Louis Vuitton’s most successful stores in Asia. The luxury retailer moved into the capital city of Mongolia in 2009. Sitting in an Italian restaurant overlooking a temple, a foreign businessman who had been in Mongolia’s capital for years told me the party to launch the store cost a few million dollars. It sold out of its entire inventory within the first three months of operation. That’s unheard of – especially for a city where, at the time, the average citizen earned as much per year as someone in Sudan makes today. The over-5,000-square-foot store sits at the entrance of one of the city’s most prominent skyscrapers. Nestled among the city’s skyscrapers are dozens of small stores – from pizza shops and coffee houses to Irish pubs. There are also several fancy looking malls and boutique stores with prices at least as high as you’d find in New York. Construction cranes are on just about every corner of this small city. The streets are so clogged with cars – including plenty of BMWs and Range Rovers – that it’s often faster to walk than drive. I abandoned the taxi that was driving me back to my hotel in favour of walking several times. Ulaanbaatar is a testament to the growing wealth of Mongolia.
You see, the country is sitting on some of the world’s richest earth. According to some estimates, the value of Mongolia’s natural resource deposits could reach $2 trillion – the equivalent to the gross domestic product (GDP) of Italy for a year. Thanks to its natural resources, Mongolia is one of the world’s fastest-growing economies. In 2011, Mongolia’s economy grew by an incredible 17.5%. And the International Monetary Fund (IMF) forecasts that Mongolia will continue to be one of world’s fastest-growing economies over the next decade. But just 10 minutes outside of Ulaanbaatar, people live in small houses and gers (a felt tent typical in Central Asia) without running water or paved roads. Around a quarter of Mongolians live in poverty today. Average GDP per capita (the value of the country’s annual production divided by number of citizens) is $3,700. By comparison, the U.S.’s is $41,749. But in time, the Mongolians living in poverty are going to move up the socioeconomic ladder… and into the 25,000 or so apartments that are built every year
in Ulaanbaatar. That’s where this month’s opportunity lies – in the booming Ulaanbaatar real estate market. Prevailing terrible sentiment toward Mongolia means that investors aren’t giving the country a second
glance. Because of that, we can buy shares in a com – pany well-positioned to capitalize on Mongolia’s growth story – for just a fraction of what the shares.
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SOURCE: bcmongolia

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