Investment Review №328. Waiting for change

Telecom Armenia: 1-Year Stock Trends

 

ACBA Bank: 1-Year Stock Trends

USD/AMD: 1-Year Dynamics

Between August 25 and September 8, 2025, Armenia’s stock market exhibited mixed trends. Acba Bank’s shares showed a sideways movement, due to a lack of significant news about the company. Telecom Armenia’s (AMTL) stock decreased by 2.9% during this period, marking a cumulative decline of 4.7% since the beginning of 2025. Conversely, securities of Tell Cell rose by 1.9%. Overall, macroeconomic data suggests moderately positive trends in the country’s economy, with stable inflation rates.

Meanwhile, the 3-year Corporate (AMD) Bond Index grew by 0.2%, indicating a minor drop in the yields. This growth may have been driven by inflation statistics that met expectations and confirmed the stability of price levels and, therefore, real (bond) yields in the market, given that fixed-yield instruments are most demanded in the local financial market. However, demand may be tempered by the low likelihood of interest rate cuts in the short term, amid current trends in macroeconomic statistics.

The Armenian dram marginally strengthened against the U.S. dollar, staying within its trading range of recent months, despite moderately negative data on cross-border cash remittances. In July, net remittance inflows reduced by 21% y/y. However, this pressure was partly alleviated by a surge in Armenia’s export activities. According to the country’s Minister of Economy, Gevorg Papoyan, exports to EU countries increased, with exports of finished food products, alcoholic beverages, and aluminum products rising by 20%, 56%, and 35% y/y, respectively.

Economic Updates

From August 25 to September 8, 2025, a limited set of Armenian macroeconomic statistics was released. Inflation remained steady, aligning with expectations and staying within the target range. Net cash inflows declined in July, while industrial production indicated a revival in the sector.

• In August 2025, inflation in Armenia slightly accelerated to 3.6% y/y, aligning with expectations, up from 3.2% y/y in July, but remaining within the Central Bank’s target range of 3% ±1 percentage point. On a monthly basis, prices increased by 0.2%, due to seasonal factors and typical summer dynamics. The key contributors to the price pressure in August were the transportation segment (+6% y/y, +0.5% m/m), as well as food products and non-alcoholic beverages (+4.9% y/y, 0% m/m). This partly mirrors the price trends in global food markets. So, the inflation trajectory is still manageable and close to the regulator’s forecast median. If these trends continue, they will constrain the potential for the Central Bank to ease monetary policy in the medium term.
• The reduction in net remittance inflows in July could become a headwind for the AMD exchange rate. In July 2025, the net inflow of cross-border remittances to individuals in Armenia amounted to $129 million, a decline of 21% compared to the previous year. Consequently, July was one of the weakest months of the current year in terms of remittance receipts, signaling a slowdown in foreign currency inflows into the country. This acceleration in negative dynamics is notable against the more moderate decline of 5.5% y/y recorded over the first seven months of 2025. However, the impact on the currency is likely being mitigated by the substantial growth / recovery in exports from Armenia in recent months.
• Armenia’s industrial output in July increased by 4.2% y/y and 7.4% m/m, reaching AMD 244.0 billion. This made July one of the strongest months of this year, showing a marked recovery after weak performance in the first half and signaling a revival of business activity in the real sector.

Corporate News

• Armenia’s technology sector achieves a significant milestone in gaining global recognition. DeepSat, a startup founded in Armenia, has obtained a prestigious Direct to Phase II contract from the U.S. Air Force Research Laboratory. DeepSat develops orbital satellite systems for real-time Earth monitoring, including those designed for dual-purpose applications.

Two-Week Outlook

During the period from September 12 to 22, no significant macroeconomic data releases are expected in the country. There might be updates or revisions to previously published indicators, but this is unlikely to substantially alter the current situation’s assessment.

The highlight of this period will be the Central Bank of Armenia’s meeting. We anticipate the refinancing rate will remain steady at 6.75%, considering the stabilization of inflation near the target range and the regulator’s prior indications that the current level is close to neutral.

Shortly after this period, a comprehensive set of August macroeconomic statistics is expected to be released. Notably, data on economic activity for the month is anticipated. We do not foresee any major surprises here, given that seasonal factors have already contributed to increased activity, as reflected in the July statistics (+9.1% y/y).

Key data releases will include the trade balance (with the previous value at -$308 million) and export/import dynamics, which are crucial for evaluating the currency market’s prospects and the overall stability of the external sector.

Additionally, manufacturing inflation statistics will be released. These figures will provide insight into price dynamics within the real sector (previous value: +4.2% y/y in July), allowing an assessment of producer-level pricing trends and the potential pass-through to the consumer sector. Meanwhile, retail sales figures will offer a signal of consumer demand within the economy (previously +3.8% y/y in July).