YEREVAN, March 30. /ARKA/. Capital market development in Armenia is increasingly dependent not only on the growth in the number of issues and the expansion of instruments, but also on the quality of the environment in which investors make decisions. The Ministry of Economy considers regular and consistent disclosure of information to be a key condition for further market deepening. Without this, it is impossible to build trust, accurately assess risks, and increase interest in capital market instruments.
In an interview with ARKA news agency, Hasmik Zakaryan, Head of the Financial Infrastructure Development Department at the Ministry of Economy, discussed the capital market development model being discussed by the Armenian authorities for the next three to five years, the role the bond market should play in this structure, the balance between market accessibility and investor protection, and the format in which future government approaches might be formalized.
ARKA – Martin Galstyan, Governor of the Central Bank of Armenia, recently stated that the Ministry of Economy, as one of the key drivers of capital market development policy, should help define its development model and approach to risk allocation. How does the Ministry of Economy envision the target model for Armenia’s capital market development over the next 3-5 years: which segments, instruments, and types of issuers should be prioritized?
A. Zakaryan – Data from recent years shows that the capital market in Armenia has developed particularly in the corporate bond segment: both the number of issues, the market value, and secondary trading activity have increased. This has formed a certain foundation for further development.
Discussions and analysis are currently underway to understand the appropriate structure for the market development model in the coming years. Potential development directions for both the bond and stock markets, incentives for the involvement of non-bank issuers, and increasing secondary market liquidity are being discussed.
Final priorities will be determined based on the results of the ongoing diagnostics and interdepartmental discussions.
ARKA – What role, in the Ministry’s view, should the bond market play in this model: as a source of financing for businesses, as a tool for mobilizing domestic savings, or as a pivotal segment from which to begin capital market expansion?
A. Zakaryan – At this stage, our discussions are focused on ensuring the bond market doesn’t remain just a growing segment, but rather becomes a driving force for overall capital market deepening. This requires not only issue volumes, but also an increase in the share of non-bank issuers, an expanded investor base, and secondary market liquidity.
In other words, we view the bond market as a support for development, but not as the ultimate goal: it should contribute to the formation of a more balanced and multi-segmented structure of the entire capital market. ARKA – Martin Galstyan also discussed the choice between a more liberal approach to capital market development and a more protective model focused on higher investor protection requirements. Which approach is more favorable to the Ministry of Economy, and where should the optimal balance be found for Armenia?
A. Zakaryan – This issue is also currently under expert discussion. On the one hand, it is important that market entry be reasonable and predictable; on the other, investor confidence and protection are among the foundations of sustainable market development.
In this context, it is important to avoid both overly restrictive requirements, which could reduce company participation, and overly lenient approaches, which could negatively impact market confidence.
From the Ministry’s perspective, it is advisable to create an environment in which market entry conditions are proportionate and predictable, and requirements are sufficient to ensure investors make informed and justified decisions.
ARKA – Does the Ministry believe that without more stringent, regular, and standardized disclosure by issuers, the bond market in Armenia will not be able to truly mature and gain mass appeal, as investors will not have a sufficient basis for assessing risks and making informed decisions?
A. Zakaryan – According to the Ministry, regular and comparable disclosure of information is one of the key conditions for capital market development.
Proper risk assessment by investors is only possible when there is sufficient, understandable, and comparable information about companies’ activities and their financial condition. From this perspective, the quality and availability of information directly influences trust in the market.
At the same time, it is important that such requirements be proportionate and applicable, ensuring both a sufficient level of information and the practical implementation of the market entry process.
ARKA – What specific measures, in the Ministry’s opinion, could simultaneously simplify companies’ entry into the bond market and provide investors with more complete, regular, and comparable information about issuers?
A. Zakaryan: Various options are also being discussed in this area: simplifying procedures, standardizing information, digitalization, and developing market participants’ capabilities.
ARKA – Should we expect the ministry’s position on the capital market development model and increasing issuer transparency to be formalized as a separate concept, roadmap, or package of legislative initiatives? If so, when will it be?
A. Zakaryan: Yes, approaches to the capital market development model and increasing issuer transparency will certainly be reflected in relevant policy documents.
At this point, it is not yet clear whether these issues will be addressed in a separate strategic document or included in the “Economic Transformation and Sustainable Development” strategy. In parallel, we plan to conduct a comprehensive assessment of the sector, assessing the legal framework, and, on this basis, develop the necessary legislative changes in collaboration with our partner government agencies.
