Tax incentives and process automation can become drivers for the development of domestic investors in Armenia

The development of the domestic investor is an important factor in the formation of a modern capital market in Armenia. This is reflected in the strategy that the country's government bodies are implementing. Such conclusions were made within the framework of the first investment and financial forum “Armenian Capital Markets: Future Outlook”, which was held in Yerevan. The event was organized by Freedom Broker Armenia together with the Ministry of Economy of the RA.

One of the three panel discussions was devoted to the topic of domestic investor development. The speakers discussed the key drivers of growth in investment activity, current tools for this, increasing the availability of products, the role of the state and issues of popularizing financial investments.

Deputy Minister of Economy of the Republic of Armenia Narek Teryan highlighted four main factors in his speech. First of all, this is the financial literacy of the population - people must understand where they are investing, what it is, what the risks and returns are. It is also important to develop technology and the availability of investment platforms so that a person can make transactions with securities in one click, just as one can now open a deposit in a banking application.

Other factors are a favorable investment environment (transparency of enterprises and development of financial infrastructure) and a variety of investment opportunities, when funds can be directed both to the domestic market and to the external environment.

Deputy Chairman of the Central Bank of the Republic of Armenia Hovhannes Khachatryan spoke in detail about the potential of the domestic market. These are financial organizations, individual investors, pension funds. According to him, the deposit base in the country is growing, and rates in the banking system are 12% per annum. At the same time, GDP per capita doubled in 3-4 years - from $4 thousand to $8 thousand. People willingly use basic financial instruments, but in terms of stock markets there is still work to be done.

CEO of Financial Market Members Association Karen Zakaryan recalled that capital markets have traditionally received the greatest development in Anglo-Saxon countries. Over time, stock markets appeared in other countries. Despite the prejudice that when issuing shares or bonds, at least 70% should be bought by large institutional players, there are assets that are completely absorbed by retail.

Partner, head of asset management and brokerage Armbrok Ashot Minasyan continued to compare the financial markets of the two countries. He believes that in terms of the level of literacy and involvement of residents in investing, Armenia is at the level of the early 2000s in Russia.

“At this stage, our population is still very poorly aware of their capabilities. And this forum is one of the big pushes for people to become more interested in investments and find products for themselves with the help of banks and brokers. What can be done to develop the market? In Armenia, several years ago, we passed a law that allowed individuals to pay for a mortgage when buying a home using personal income taxes. This gave impetus to housing construction,” Ashot Minasyan explained.

However, not only brokers, but also the state as a whole, professional market participant, investors, and the academic environment should be involved in educating the population. CEO of Freedom Broker Armenia Ovak Ovakimian is confident of this.

“The path that the banking system has traversed has not yet been traversed in the investment environment. One of the key drivers of this development will be banks. We do not have the most favorable geographical location of the country, and the development of products that do not have “weight”, it seems to me, is very important. The financial sector is one of those areas that definitely needs to be prioritized,” Ovak Ovakimian noted.