mongolia.jpgRapid economic growth is attracting investors willing to tolerate corruption and unpredictable regulation. Sounds like the typical fund manager's report on China, right?

No, today we're talking about Mongolia.

According to Bloomberg, China's land-locked neighbour is poised to become the new frontier as far as investment managers are concerned.

Mongolians are trading in traditional felt-covered yurts for homes and cars as the country recovers from the recession that followed its escape from Soviet domination in the early 1990's.

Interestingly, much of the investment interest is coming from China.

“Mongolia is an exciting growth market where few people have gone, ” says Thomas Tsao of Gobi Partners, a Shanghai venture-capital firm, which oversees $100m.

Asia Pacific Investment Partners, a HK-based private equity firm, is raising a $25m property fund focused on Mongolia.

The firm told Bloomberg that property prices in Mongolia look set to increase by 15% to 25% a year because of a housing shortage, rising incomes and the migration of nomads into Ulan Bator.

Investor interest in Mongolia is today mostly focused on the resources sector, because of neighbouring China's insatiable apetite for raw materials. China, the world's largest copper user, provides half of Mongolia's overseas investment.

However, who's not to say that Mongolia won't one day have a fledgling electronics manufacturing services industry or, even, an Intel chip plant?

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