Capital market law is so simple to buy when it is cheap and sell it when it is high. Therefore the capital market players are well aware of their risk and benefits. But the first ever funny resolution in the world’s capital market was made this December 9 2008 in Mongolia. This resolution said that the certain stock prices cannot fall. Many economists think that it is so intervening and breaching many people’s interest in the capital market. It also controls the channel of gaining more benefit and profit from the capital market. Mr. U.Ganzorig, the president of the Mongolian Financial Market Association, said that stock price changes not because of a state organizations or regulatory body, it is well depend on supply and demand. If the state body intervenes, then why we need free market economy.
Most importantly, FRC’s resolution is effective for the companies that are listed after 2005. But there is no experience in the world to stop the stock price fall. Some countries issue certain regulations in the direction of softening surges in the capital market or suspend trading for one day only.
What the dealers say about it:
Broker and dealer Gantulga: Stock price surge is normal. I think this resolution is so harmful for the capital market and its players.
Broker and dealer Bayar: FRC is so blind with its resolution. It didn’t receive any comments from us. It may seem okay today, but nobody can say what it will be tomorrow. Yes, it protects investors’ interests from one hand, but on the other hand it is much like evaluating a table with cost of 10 MNT up to 100 MNT. Price surges and it is normal thing. It seems to me that it stops falling price of some stocks such as Anod.
Shareholder B.Naran-Erdene: People’s knowledge about stock is so low. They tend to buy when people are all about to buy. They never think about the company profile and its plan. I own Gobi HBOil stocks. Anod made a good move comparing itself with Zoos and made good marketing to sell its stock from 1080 MNT up to 1600 MNT. I saw that Anod stock was sold at 500 MNT. It was unbelievable. But I hesitate that FRC issued this resolution in favor of the investors. If the price is regulated, then brokers will not be interested in the capital market. Also we cannot buy cheap stock. It means that the Stock Exchange is not necessary to Mongolia. MSE is better to shut its door.
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