Investment Review №346. Riding the Green Wave

Telecom Armenia Stock Performance (Post-IPO)

ACBA Bank: 1-Year Stock Trends 

USD/AMD: 1-Year Dynamics

3-Year Corporate Bond Index (AMD) – Post-Update

Between May 18 and June 1, 2026, the Armenian market delivered broadly positive performance underpinned by solid macro data and sustained investment momentum. Telecom Armenia (AMTL) gained 5.5% over the period, reflecting stronger interest in higher-beta local equities. Acba Bank rose 1.1%, bringing its YTD gain to 15.4%, signaling persistent demand for financials despite uneven Q1 GDP growth. Overall, the data confirm a shift in economic growth drivers toward industry and construction, while domestic demand is subdued amid nearly flat retail sales in March-April. Together with rising prices, this increases uncertainty and could weigh on investor sentiment and risk appetite.

In the debt market, the Corporate 3-year AMD Bond Index rose 0.2%, with yields edging lower, indicating moderate demand and improved expectations for the Central Bank’s rate path, likely following the regulator’s recent guidance (see below). Despite faster consumer inflation, the Central Bank Governor’s latest remarks, alongside slight easing in producer price pressures, make an imminent policy tightening less likely. This setup may support demand for fixed-income instruments, though the inflation trajectory remains the key variable. The dram appreciated another 0.4% versus the dollar, modestly offsetting external inflation risks. We also believe the dram’s continued strength has supported investor interest in local-currency assets. 

Economic Updates

Between May 18 and June 1, 2026, a substantial slate of macroeconomic data was released. The key takeaways were a moderation in Q1 GDP growth, a pickup in economic activity, and a deceleration in producer price inflation.

Economic activity in Armenia rose 7.1% YoY in April 2026, well above market expectations (3.2%) and accelerating from 6.6% in March. On a monthly basis, economic activity increased 6.0%. The main drivers were industry (+11.7% YoY), construction (+24.7%), and services (+9.1%), pointing to a recovery in production momentum and a resilient investment cycle. By contrast, trade was nearly stagnant (+0.1% YoY), remaining a weak point in domestic demand. For January–April, economic activity was up 6.9% YoY.

Armenia’s GDP grew 4.0% YoY in Q1 2026, slightly below the 4.1% forecast. The mining sector (+35.5% YoY), construction (+20.6% YoY), and transportation and warehousing (+12.2% YoY) were the main contributors, while manufacturing (+1.5% YoY) and trade (+2.1%) expanded modestly. The financial sector recorded an unexpected decline (-13% YoY vs. +14.7% YoY in 2025), likely reflecting, in part, weaker foreign trade. Given the sector’s nearly 10% share of GDP in 2025, this weighed on the headline result. In our view, the Q1 slowdown is more likely to prove temporary and we expect some reacceleration in GDP growth in the coming quarters.

The Central Bank of Armenia expects inflation to return to its target range of 3% ±1 pp over the medium term, despite an acceleration to 5.3% YoY in April from 4.5% in March. Governor Martin Galstyan noted that the Board is discussing a possible rate hike; however, the majority favors keeping the policy rate unchanged for now, given that recent inflation dynamics are driven largely by supply-side factors. At the same time, the CBA continues to flag external risks amid ongoing geopolitical uncertainty and rising energy prices. The CBA statement may offer moderate near-term support to market sentiment. That said, our broader view is unchanged: the current macro backdrop continues to pose risks of near-term monetary tightening.

Producer price inflation in Armenia slowed to 7.9% YoY in April 2026, well below the 12.0% forecast and the March reading (9.5%), marking the lowest rate since December 2025. On a monthly basis, producer prices fell 0.7%. Overall, this suggests a modest easing of cost pressures, which—if sustained—could partially temper CPI growth. However, we see imported inflation as the chief source of upward pressure on domestic prices. 

Corporate News

Unibank (UNIB) announced a new common share offering totaling AMD 3.9bn (~$10m). The bank plans to issue 10 million shares at AMD 390 per share (~$1) by September 9, 2026.

Two-Week Outlook

Between June 5 and June 15, 2026, investor focus will center on a handful of high-impact macro releases. Key events include the release of May inflation data (market forecast: +5.8% YoY) and the CBA’s decision on the refinancing rate. The parliamentary elections will also be a major nationwide event; any escalation in political tensions or disruptions could heighten financial market volatility. In the context of persistent inflationary pressures and robust economic activity, these developments are likely to be the primary drivers of short‑term market moves. 

In our base case, the CBA is likely to keep the policy rate on hold over the next one to two months, given the regulator’s recent guidance. That said, the inflation trajectory remains decisive: any acceleration would increase the probability of tightening, which would likely weigh on local bonds while providing additional near‑term support to the Armenian dram (AMD).