Investment Review №349. High Hopes

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

 

Armenian equities delivered mixed performance between June 29 and July 13, 2026. Telecom Armenia (AMTL) edged 0.2% lower over the period, with sentiment likely weighed by VIVA’s acquisition of OVIO, which could strengthen VIVA’s competitive positioning in the domestic telecom market. That said, we believe the market's overall competitive balance remains largely intact. The transaction's ultimate impact is not straightforward—while the combined entity could benefit from operating synergies and greater scale, integration risks and potential competitive responses leave the net effect balanced, with both upside and downside scenarios. Meanwhile, Acba Bank shares surged 10.6% over the period, bringing YTD gains to +23.8%. Despite a broadly constructive macro backdrop—with Fitch expecting Armenia’s economic growth to outperform the median growth rate among similarly rated sovereigns—investor demand remains heavily concentrated in the banking sector and local bond market.

In the fixed-income market, the three-year corporate bond price index advanced 0.5%, with yields moving lower, reflecting a moderate pickup in demand for local debt instruments. Investor appetite remained resilient despite a modest acceleration in inflation in June. Fitch expects inflation to stabilize, although it sees a possibility of a temporary 25bps rate hike, broadly aligning with Freedom’s view that elevated inflation pressures could prompt the central bank to deliver a measured monetary policy tightening. However, we do not expect a modest rate increase to have a material negative impact on local bond prices. The AMD/USD exchange rate was unchanged over the period, continuing to serve as an anchor of stability and limiting FX-related risks for domestic financial markets. 

Economic Updates

Macro data releases remained limited over the past two weeks. The key developments included a pickup in YoY inflation in June and the publication of Fitch Ratings’ updated macroeconomic forecasts.

• Armenia’s inflation accelerated to 5.1% YoY in June 2026 vs. 4.2% YoY in May, remaining above the Central Bank’s target range. On a MoM basis, prices declined by 0.5%. The food segment remained the key contributor to annual inflation (+8.6% YoY; −1.5% MoM). Services prices increased by 2.4% YoY (+0.4% MoM), with elevated inflation persisting in education (+8.3% YoY), while restaurant and hotel prices rose (+4.1% YoY). Overall, the CPI composition pointed to persistent price pressures in selected components, alongside uneven monthly dynamics across the consumer basket.
• Telecommunications and TV/radio content production revenues increased 7.1% YoY in May 2026 and 2.3% MoM, pointing to a sustained recovery in sector activity during Q2. For January–May 2026, the telecom segment grew 5.3% YoY, remaining the key driver of overall revenue growth. In our view, continued acceleration in industry growth could provide support for AMTL’s financial performance and share price, provided the positive trend persists.
• Fitch Ratings forecasts Armenia’s average inflation at 4.4% in 2026, followed by a gradual return toward the 3% target. According to the agency, the upward inflation trend had already emerged prior to the escalation of the Iran conflict, driven by higher food prices, services inflation, and broader healthcare costs. At the same time, Russia’s restrictions on imports of Armenian goods could increase domestic supply of selected products and have a disinflationary impact. Fitch also expects a temporary 25bps increase in the refinancing rate to 6.75%, reflecting the need to contain near-term inflation risks.
• Fitch Ratings expects Armenia’s GDP growth to slow to 5.2% in 2026 from 7.1% in 2025, while remaining well above the 2.9% median growth rate for ‘BB’-rated peers. The agency also affirmed Armenia’s long-term sovereign rating at ‘BB-’ with a Positive Outlook, highlighting the economy’s limited exposure to oil markets and relative resilience to regional shocks, while noting continued uncertainty around Russian import restrictions. Over the medium term, Fitch expects growth to stabilize at ~5%. 

 

Corporate News

• Viva Armenia announced the acquisition of JNC-Alpha CJSC (Ovio brand). The transaction is aimed at creating an integrated digital ecosystem combining mobile services, fixed-line internet, television, telecom infrastructure, and digital services. The integration of Ovio could potentially strengthen VIVA’s competitive positioning across several market segments. 

Two-Week Outlook

Between July 17 and 27, market attention will be focused on the release of key June macro data, including economic activity, trade balance, and inflation indicators. These publications will provide a clearer assessment of the resilience of current growth dynamics amid persistent price pressures and a more challenging external environment shaped by ongoing restrictions and shocks. Accordingly, restrictions on export flows to Russia are likely to be reflected in upcoming data releases. We expect a moderate widening of the trade deficit and do not rule out a temporary slowdown in economic activity. We note that Armenian Central Bank Board Member Armen Ktoyan previously estimated that the impact of Russia’s restrictions on imports of selected Armenian goods could amount to ~2% of GDP for Armenia.

At the same time, inflation data continue to point to a potential need for modest monetary policy tightening in the near term. While price pressures remain primarily driven by the food segment, inflation dynamics across services and non-food goods remain moderate. This suggests the absence of broad-based demand overheating, although the risk of second-round effects remains.