Interview: Sheikh Khalifa bin Ebrahim Al Khalifa

What are the main priorities when it comes to enhancing liquidity in the local capital markets?

SHEIKH KHALIFA BIN EBRAHIM AL KHALIFA: In a bid to grow the region’s capital markets, in July 2022 the Tabadul Hub was created by BHB, the Abu Dhabi Securities Exchange and the Muscat Stock Exchange and launched. Our exchanges share the aim of creating a broader investor base and providing more options to satisfy appetite in the region. Tabadul also provides investors with access to investment opportunities across the three exchanges using a single account or identifier.

As the region witnesses growth in initial public offering (IPO) activity, the interconnectedness of Tabadul means that a single IPO on a particular market can be accessed through most of the other exchanges. The platform will not only have an impact on trading volume within a specific market, but will also increase the number of investors interested in participating in regional IPOs. With the region at the centre of global IPO interest, the goal is to ensure that opportunities are spread across the various markets and that Tadabul sets the stage for integration in the coming years.

At present, Tabadul Hub consists of three connected exchanges, with more interest being generated from other markets within the broader MENA. Connecting all of the exchanges in the region would represent a fundamental shift that would not necessarily be easily accepted by some capital markets authorities. In this sense, Tabadul plans to advocate investor passporting and further facilitate investor onboarding.

In what ways does a country’s emerging market status translate into passive inflow?

SHEIKH KHALIFA: International indices providers use specific criteria to determine a country’s classification including size and liquidity measurements, and market accessibility factors. Beyond technical frameworks and revised regulations, a classification upgrade can have a ripple effect across the economy and improve a country’s business attractiveness. The biggest material effect of an index upgrade is the amount of funds a country’s capital markets can attract, mainly reflected by the country’s weight within global indices.

How do you assess Bahrain’s progress in efforts to improve financial literacy in the general population?

SHEIKH KHALIFA: BHB is developing educational programmes to improve knowledge and financial literacy in order to enable effective decision-making. The programmes focus on individuals of all ages, with the Smart Investor programme targeting children in elementary schools, and the TradeQuest programme focusing on students in secondary schools and universities.

Through collaboration with the Bahrain Institute of Banking and Finance, BHB offers free and professional- level courses. It also endorses a capital markets apprenticeship programme that offers on-the-job training aimed at Bahraini graduates seeking practical experience within the capital markets. The programme stems directly from BHB’s belief in the importance of fostering investment awareness and instilling financial literacy across various age groups.

To what extent do environment, social and governance (ESG) principles align with investor interests?

SHEIKH KHALIFA: The ESG agenda is becoming increasingly important and relevant, particularly with recent changes by the International Financial Reporting Standards and the endorsement of the International Sustainability Standards Board. BHB has been working with listed companies to adapt ESG measures locally, while also looking to work with other exchanges in the GCC to unify disclosure guidelines. Having regionally endorsed ESG standards will encourage businesses, listed or otherwise, to adapt sustainable practices. BHB will continue to review ESG requirements to ensure that organisations are disclosing and reporting effectively and the interests of investors are fully safeguarded.