YEREVAN, April 6. /ARKA/. Amid the S&P 500’s worst quarter since 2022, rising global anxiety, and persistent geopolitical uncertainty, investors are increasingly asking whether this is a temporary market reaction or a deeper shift in investment logic. Anna Kazaryan, Head of Equity Research at Sirius Capital, spoke with ARKA about the structural shifts currently shaping global markets, how these processes are impacting Armenia, and what the capital market can expect in the second quarter.
ARKA – The S&P 500 ended the first quarter with its worst decline since 2022. To what extent do you think this is an emotional market reaction to geopolitics and rates, and to what extent is it a sign of a deeper shift in the global investment landscape?
A. Kazaryan – Structural changes in the stock market were already clearly evident last year. In particular:
1. The global economic focus has shifted from globalization to regionalization and protectionism. Ensuring energy security and a sufficient domestic resource base has become increasingly important. This means higher costs.
2. The premium for US “exceptionalism” is deflating. For years, US assets traded at a premium because US economic growth was consistently higher, tech company profits grew at an incredible rate, and the dollar’s dominance was unquestioned. Now, all three pillars are being challenged. The dollar’s status as a “safe haven” is no longer taken for granted.
3. We have moved on from the era of near-zero interest rates, which inflated all asset classes. Central banks have little room to cut rates, and budget deficits remain significant.
4. The market is trying to assess the consequences of artificial intelligence (AI) development: its impact on the labor market, on company efficiency, and on the existence of software companies. AI-related stocks are shifting from hype to earnings reporting: the market has shifted from assessing AI’s potential to demanding proof of return on investment.
ARKA – What did March of this year reveal?
A. Kazaryan – The war with Iran revealed how vulnerable the Strait of Hormuz choke point is, how quickly energy supply chains can be disrupted, and how prepared major powers are for escalation.
In this case, it’s impossible to separate the market’s emotional reaction from the rational. The market is volatile due to highly contradictory statements from politicians. How and when the conflict will end is unclear.
ARKA – What do you consider the main external risk for investors now: geopolitical escalation, inflationary pressure from oil, a revision in interest rate expectations, or a general decline in risk appetite? A. Kazaryan: These four risks are not isolated threats, but rather a single chain:
Geopolitics → energy shock → inflation → rate revision → risk aversion.
We think that the main problem for the capital market now is that traditional defensive instruments aren’t working as well as they used to: bonds are falling along with stocks, gold posted its worst month since 2008, and the dollar is under structural pressure. Diversification is currently less effective than usual—and this in itself is the main risk.
ARKA: Is the current behavior of global markets already a phase of longer-term caution, or can the market quickly recover from stress at the first signs of de-escalation?
A. Kazaryan: The market is highly likely to rebound. We see growth with every news event that gives hope for de-escalation. However, since verbal interventions do not lead to a real resolution of the conflict, “first signs” will not be enough for a significant recovery. Furthermore, structural changes (which we discussed in the first question) will continue to weigh on the market, and they remain on the agenda.
ARKA – To what extent did the Armenian capital market operate according to its own logic in the first quarter, and to what extent has it already begun to feel the impact of the global risk-off?
A. Kazaryan – The Armenian capital market is primarily a bond market. In March, reflecting the external environment, we saw a slight increase in yields in the local market. Prior to this, Armenia had been experiencing a structural trend of declining yields for a long time.
ARKA – What would you say were the key results of the first quarter of 2026 for the Armenian capital market: the main achievement and the main limitation?
A. Kazaryan – The rate at the five-year government bond auction reached 7.5% in dram terms, which is the lowest in several years. We consider this the main achievement of the quarter.
ARKA – What do you currently consider the main risks for the Armenian market: external risks such as geopolitics, rates, and currency exchange rates, or internal risks related to liquidity, market depth, and investor behavior?
A. Kazaryan – Regional geopolitical risks remain the main deterrent to investment in Armenia for foreign investors. Parliamentary elections will also be held in Armenia this year, which typically creates uncertainty for investors. Market liquidity is also insufficient to attract investors.
ARKA – How have you observed investors in Armenia behaving in January-March? Were they willing to seek new opportunities or have they become noticeably more cautious?
A. Kazaryan – High uncertainty remains in foreign markets, which is discouraging investors: they don’t know where to invest in the current situation.
In Armenia, investors are looking for high returns, which are becoming rare, as the main trend in the local market has recently been declining returns.
ARKA – What was the main market driver in the first quarter: new placements, yield levels, confidence in individual issuers, increased interest in investments, or limited alternatives?
A. Kazaryan – The main driver of the Armenian capital market recently has been increased interest in government bonds from foreign investors.
ARKA – What sentiment do you expect in the second quarter: continued caution, a return to risk appetite, or a more selective demand for high-quality stories?
A. Kazaryan – Given the geopolitical situation and the anticipation of elections in Armenia, we believe investors will approach investment decisions with caution.
ARKA – If the external environment became tougher towards the end of the quarter, to what extent did this test the maturity of the Armenian market? How resilient were investor demand and behavior?
A. Kazaryan – The Armenian market is still too small to significantly reflect external shocks. So far, the main reflection of external shocks has been a slight increase in bond yields. ARKA – What did the first quarter reveal in terms of the state of the capital market in Armenia? Can we speak of a gradual increase in demand and a better understanding of risk, or is the market still too sensitive to individual placements and external factors?
A. Kazaryan – We are seeing gradual development in the Armenian capital market: we are seeing more placements, more issuers in the market, and we are seeing growing interest in debt instruments in the domestic market. However, it would be wrong to say that individual placements have had a significant impact on overall market trends recently.
ARKA – To what extent is the main challenge for the Armenian market today not so much an external shock, but rather its internal architecture – market depth, liquidity, repeatability of demand, and the ability to maintain investor interest between placements?
A. Kazaryan – We cannot completely rule out the influence of an external shock, as it affects the behavior of institutional investors, who are the main driving force, as well as the country’s macroeconomic indicators.
However, internal structural factors also pose a challenge. For example, market liquidity, despite growth, remains low.
ARKA – What will be the main condition for a strong second quarter for the Armenian capital market: a reduction in external nervousness, continued domestic investor activity, or the emergence of new high-quality stories?
A. Kazaryan – As stated above, we believe that investors will approach investment decisions with caution in the second quarter. Of course, an improving geopolitical backdrop or the emergence of interesting investment stories within the country would be good incentives. The Armenian bond market has historically been concentrated in the banking sector, and diversification of issuers would in itself be a structural positive.
