YEREVAN, March 10. /ARKA/. Investments in the modern world are not only an opportunity to increase capital but also a powerful tool for economic development. However, investors, including those in Armenia, have pressing questions regarding strategy, risk management, and emerging opportunities in the capital market. Mikael Margaryan, CEO and Chairman of the Board of Directors of Cube Invest, spoke in an exclusive interview with ARKA news agency about the key areas of activity, barriers, and prospects for the development of the capital market in Armenia, and dispelled popular myths related to investing.
ARKA: Mr. Margaryan, Cube Invest CJSC was established in 2017 and today is one of the leading investment companies with an authorized capital of 760 million drams. What is the main strategy and areas of activity of Cube Invest? What industries and types of assets do you focus on? What financing instruments and investment products do you offer?
M. Margaryan: Cube Invest operates in various areas and offers clients a range of products and services. First of all, these include brokerage services—clients can use Cube Invest to purchase and manage virtually any security listed on a particular stock exchange. We also offer over-the-counter options. Additionally, we provide depository services—securities acquired through our assistance can be stored with various depositories worldwide with which we collaborate.
We offer portfolio management services: our specialists, taking into account the client’s risk appetite and profile, develop an appropriate investment strategy and, based on its subsequent analysis, form the most profitable securities portfolio for the client.
We also manage a number of non-public funds—this is part of our portfolio management strategy, where there is a clear plan: investors can buy shares in the fund and expect a certain profitability within the framework of this strategy.
Furthermore, we offer non-cash currency conversion services. We provide issuers with underwriting services for securities placement, preparing prospectuses, and offering consultations.
ARKA: You recently signed a memorandum of cooperation with Parvanyan Consulting—what are its goals and prospects?
M. Margaryan: Parvanyan Consulting offers a range of services to its clients, including accounting and legal consultations, and concession management services. As a company specializing in the financial sector, particularly in investments, we aim to consolidate our efforts in providing higher-quality and more comprehensive services.
The cooperation will particularly focus on securities placement, as there is growing interest among potential issuers due to the government’s program to subsidize companies listing securities on the exchange.
ARKA: What criteria do you consider when choosing projects or companies for investment?
M. Margaryan: First and foremost, we assess the company’s performance in terms of efficiency, image, and market value. It is also important to ensure that the company has no legal issues.
ARKA: What are the main steps for forming a successful investment portfolio?
M. Margaryan: There are several, but I will highlight two key factors. First, accurately assessing risk appetite—that is, understanding the client’s investment horizon. Second, portfolio diversification is crucial. In the current uncertain climate, any factor, whether a statement by a country’s leader or breaking news, can have a sharp impact, so diversification plays an essential role.
ARKA: Many, especially in Armenia, hold stereotypes about investing—that it is difficult, risky, only for the rich, among others. Could you highlight the top 5 stereotypes and explain where the myth lies and where reality is?
M. Margaryan: The first stereotype is that “Investing is for the rich.” I consider this a myth. Today, there are innovative technologies, such as fractional shares, which allow investors to buy part of a security rather than a full lot. I disagree with the statement that only the rich can invest—today, anyone can invest, even with the smallest amounts.
The second myth is that “Investing is like gambling.” I also disagree with this because there is a solid fundamental analysis that considers the impact of specific circumstances at a given time. Not everything can be predicted, but fundamental analysis allows us to make certain forecasts. Gambling operates entirely differently, and I don’t see any parallels for comparison.
The third stereotype—about the need for in-depth knowledge of the market—is somewhere between myth and reality. There are two types of investors: active and passive. Active investors like to monitor the market, read news, and make decisions based on them. In this case, yes, knowledge is required. However, professional market participants can provide advisory services to those who lack the time or capacity to track market trends.
I will combine the following two myths: “Investing in one company” and “Investing is risky.” We’ve already addressed the first one—it’s certainly a myth: one should not invest in a single company, especially given the numerous uncertainties. At the same time, investments are inherently risky, but these risks can be mitigated and balanced through diversification and fundamental analysis. A common mistake is investing in a company based on someone else’s opinion without proper information. Without a clear understanding of what drives the company’s growth, it’s impossible to know when to sell its shares if the company begins to decline. Therefore, making sound decisions requires proper information and analysis.
ARKA: How do you assess the current investment climate in Armenia, and what risks do you see?
M. Margaryan: Traditionally, financial literacy in Armenia has not been very high, and capital markets have always been underdeveloped. However, I’m pleased to say that, at least in terms of financial literacy, progress has been made, which I believe is linked to the influx of financial capital.
There is more money in the economy, people are living better, and their savings are growing. In addition to traditional methods like keeping cash at home or in deposits, people are becoming more interested in alternative instruments, such as bonds. With the government’s approval of a unified strategy for capital market development in 2020, several measures are being taken to activate the market. Financial literacy is also improving with the entry of new market players.
ARKA: What financial instruments and initiatives could stimulate the development of the capital market in Armenia?
M. Margaryan: The involvement of the Armenian Stock Exchange is critical in this matter, especially after the Warsaw Stock Exchange acquired a controlling stake in it. This exchange is one of the largest in Eastern Europe, with significant players and investment companies managing funds equivalent to Armenia’s GDP.
At the moment, the AMX has limited functions and tools, although it is building international partnerships. For example, the exchange joined the Tabadul digital hub through a cooperation agreement signed with the Abu Dhabi Stock Exchange last year.
Practical steps are now needed. AMX has a program that, if implemented, will help activate the capital market. As market participants, we also have a significant role to play in increasing financial literacy and working with potential issuers. Development will require joint efforts.
ARKA: What other barriers to the growth of Armenia’s investment market, apart from the insufficient level of financial literacy, do you consider key, and how can they be overcome?
M. Margaryan: We have established strong partnership relations with the Central Bank, the Ministry of Finance, and the Ministry of Economy, and they are ready to assist within their powers.
As for global barriers, I do not see any. The main challenge may be that Armenia is a small country with its own currency, limited resources, and financial capabilities, and faces specific geopolitical conditions.
ARKA: In 2023, AMX Director Hayk Yeganyan mentioned that the development of Armenia’s capital market is partially hindered by the lack of qualified financial intermediaries, investment banks, and brokers. Do you agree with this, and has the situation changed?
M. Margaryan: Possibly, yes. If we look at the current members of the exchange, they are mainly banks and investment companies. The more participants there are, the more transactions, the broader the opportunities, and the more new products will be available. In this context, I agree with this statement.
For example, our company is very active on the exchange, both for our own transactions and those of our clients. We manage our own portfolio, a significant portion of which consists of Armenian government bonds. The Ministry of Finance conducts quarterly analyses of the primary dealers of government bonds (the four banks authorized to participate in primary placements) and potential market participants. Over the last three quarters, Cube Invest has been in first place among potential participants.
I agree with Hayk Yeganyan that market participants are essential. Since 2023, several new participants have joined, and new investment companies have been established. This is very positive because each new company brings new clients and contributes to the overall health of the market. I believe the outlook is positive, and the market will continue to grow.
ARKA: How do you assess the prospects for attracting venture capital in Armenia? What are the opportunities and prospects for cooperation between investment companies and startups or SMEs?
M. Margaryan: Venture capital is a new concept in our reality, but it is a very important innovation. I am glad to see that people are investing in such funds. This sector has great growth potential and has been steadily growing worldwide in recent years.
Since Armenia’s startup ecosystem is still in its early stages, I believe new venture funds will emerge, which will be a key component of the overall financial system.
ARKA: How effectively are technological trends such as fintech, blockchain, and AI being utilized by investment companies?
M. Margaryan: Very effectively. As we plan and shape our vision for the future, we introduce new products that leverage innovative technologies. By collaborating with partners in various countries, including the US and Europe, we are seeing the successful implementation and promotion of new products. We are actively working in this direction.
