YEREVAN, July 11. /ARКА/. In the period from June 16 to June 30, 2025, the Armenian stock market demonstrated mixed dynamics. Telecom Armenia (AMTL) shares continued the upward trend of June, increasing in price by another 4.0% to the highest value since the end of Q1 2025. This was in all likelihood supported by a statement of the head of Telecom Armenia about the launch of a data center based on artificial intelligence (AI) solutions in about six months. The higher-than-expected statistics on economic activity growth in the country could also be positive for sentiment. Although, on the other hand, Acba Bank shares corrected by 5.4% over the specified period, after growing in early June.
At the same time, the price index for three-year corporate bonds denominated in drams continued to decline (by 0.4%), pushing yields higher. The growth in yields on local medium-term bonds could have been driven by increased market concerns related to geopolitical events in the region, as well as a decline in real yields and increased market concerns about a potential tightening of monetary policy amid accelerating inflation.
However, in the short term, we do not expect the regulator to raise rates in the absence of macroeconomic excesses. At the same time, the country’s currency remains stable against the US dollar after strengthening slightly in mid-May. Among the statistics that could potentially have influenced the strengthening of the AMD in the middle of the second quarter, we can highlight the historic high in foreign remittances to Armenia in January–April (+6% y/y) and continued growth in May (+13.9% in January–May), as well as the stabilization of foreign trade flows. It is noteworthy that, according to the Eurasian Development Bank (EDB) forecast, the average annual exchange rate of the dram against the dollar in 2025 will be 392, compared to the average since the beginning of the year of 391 and the current value of 385.
Economic news
Between June 16 and 30, 2025, statistics on the Armenian economy were released by the country’s National Statistical Committee. Economic activity in Armenia accelerated significantly in May, which is a moderately positive signal for the market and may be partly due to the active influx of tourists into the country. At the same time, foreign trade activity stabilized after last year’s surge.
Economic activity accelerated to +10.4% y/y in May, significantly outperforming the average dynamics since the beginning of the year (+5.7% for January–May). Among other things, this is an indicator of strong domestic demand, which is a positive factor for companies’ revenues and for the market as a whole. The growth is probably partly due to a more active influx of tourists into the country: in May, it was 8.6% y/y and approximately 46% m/m.
Foreign trade is normalizing after last year’s boom. The negative trade balance in May was close to that of April (−$386 million in May vs. −$381 million), as we expected. However, it is important to note that the rate of decline in foreign trade slowed: in May, the decline was already 28.8% y/y, compared to an average decline of 49% y/y for January–May. Specifically, exports in May fell by 39.3% y/y and by 19% compared to April, while imports fell by 20.4% y/y and by 12% m/m. The decline itself was expected given the high base in 2024 and the curtailment of re-export schemes.
Inflation in the manufacturing sector, in turn, was slightly higher (2.2% y/y) than the previous month (1.9% y/y), which was in line with our expectations of accelerating price growth, although it was slightly higher than market expectations of 1.8% y/y. Overall, the statistics should not significantly affect investor sentiment.
The EDB forecasts inflation in 2025–2027 within the Central Bank’s target range (2.5–3.1%) (3.0%). However, the bank notes an increase in external inflationary risks due to geopolitical tensions in the Middle East and does not rule out a tightening of monetary policy in the country, although the recent de-escalation of the conflict between the parties reduces the likelihood of this risk materializing. The EDB’s GDP growth forecast for 2025, 2026, and 2027 is 5.5%, 5.3%, and 5.0%, respectively.
Company news
The CEO of Team Telecom announced the opening of an AI-based data center in about six months. The project, which will cost about $500 million, will be implemented jointly with NVIDIA, Dell, Firebird, and the government of the country, according to Arka-Telecom.
Expectations for the next two weeks
A small number of significant macroeconomic indicators are scheduled to be published between July 4 and 14, 2025. However, updated/revised metrics on previously published statistics may be released.
Inflation statistics (CPI) will be released, which, according to forecasts, should indicate a slight increase in June to 4.5% against 4.3% in May. Against the backdrop of an influx of tourists into the country, there may be some seasonal acceleration in inflation. At the same time, a meeting of the Central Bank is also expected during this period. However, in the short term, we do not expect any significant changes in monetary policy, particularly in the refinancing rate, despite a slight acceleration in inflation.
At the same time, if prices rise at an accelerated pace, demand for local debt instruments may come under pressure, causing further outflows of investor funds into riskier assets. The key point is that the current level of rates is considered by the regulator to be close to neutral, which implies a low probability of a significant reduction in the future. Moreover, signs of a sustained acceleration in price growth should increase the likelihood of monetary policy tightening in the country in the eyes of investors, as well as put pressure on the real yields of fixed-income instruments.
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