Interview: Fouad Rashid
What are the key market trends for the next 18 months, and what other developments look likely?
FOUAD RASHID: Trading data for the first quarter of 2013 looks encouraging when compared to the same period of 2012. The value of shares traded rose by some 149%, overall volume went up by 234% and the number of trades jumped by 49%. The Bahrain All Share Index grew by 2.44% compared to its closing at the end of 2012, and the market capitalisation stood at around $16bn. We anticipate that this positive trading pattern will continue in the year ahead.
In 2013 we also expect new market rules to be enforced, followed by the issuance of a new listing settlement, clearing and depository rules, as well as the implementation of the new trading system.
What can be done to further enhance liquidity and trading volumes on the BHB?
RASHID: GCC nationals represent a major segment of our investor base. To encourage their participation, all brokers licensed by juristic bodies in the GCC countries will be able to apply for membership at BHB to trade remotely, without having a physical presence in Bahrain. In addition, an online trading incentive programme will be implemented in 2013 that will offer incentives to brokers by lowering transaction costs and the costs of other support services provided by the BHB. This programme aims to attract new types of investors and provide them with quality services at a reasonable cost.
We also plan to introduce an automated disclosure system that will enhance the ability of listed companies to provide timely and accurate information to investors through the bourse’s website.
With most money in the region still sitting in fixed deposits, what role can capital markets play to spur growth across the Middle East?
RASHID: The role of any exchange is to allow investors an opportunity to diversify the risk associated with their investments and simultaneously contribute to the growth and expansion of listed companies. Our goal is to establish the BHB as the region’s centre for capital markets and to promote investment through the bourse. This service includes establishing an alternative market for small and medium-sized enterprises, where they will be offered different methods and solutions to grow their business through capital markets. This goal is supported by the regulations in Bahrain that allow up to 100% foreign ownership of enterprises, and enforce no tax on capital gains or cash dividends.
How is the BHB engaging in investor education?
RASHID: The bourse believes investor education is a fundamental element needed to develop the capital markets in the region. One main goal of the strategy is to provide and promote investor education through awareness programmes at schools. In 2012 the BHB launched a virtual trading programme called TradeQuest for universities, which aims at increasing the investment awareness among higher education students by focusing on investment trading on the BHB and the New York Stock Exchange.
The BHB has conducted a similar project for the last 16 years directed at high school students. Moreover, the bourse and JP Morgan have been jointly providing an ambitious investor relations programme for the past three years, and will continue to do so for the benefit of the capital market community.
How is the bourse’s strategy currently being developed to diversify listings?
RASHID: The BHB’s current strategy was developed to address two major issues: liquidity and listings. We are implementing several initiatives aimed at providing practical solutions to both of these problems, which primarily involve incentive programmes for new investors. We will also continue to improve the bourse’s legal and technical infrastructure, and implement a marketing plan and awareness initiative to highlight the competitive advantages of BHB in the process.