Capital Markets
From The Report: Bahrain 2016
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As of December 2015, the Bahrain Bourse was home to 46 listed companies distributed across several segments including: commercial banks, investment, services, insurance, industrial, hotels and tourism, closed companies and non-Bahraini companies. While falling oil prices and unrest in the wider Middle East region have continued to pose growth challenges to the Bahrain Bourse, a process of market development continues in the form of technical upgrades, legislative improvements and a steady stream of new investment instruments, including options, exchange-traded funds and real estate investment trusts. Meanwhile, initiatives are under way to increase awareness of the bourse’s offerings and benefits among the local population, including a strengthened social media presence and savings and investment seminars across the country.

This chapter contains a viewpoint from Najla M Al Shirawi, CEO, Securities & Investment Company.

Articles from this Chapter

Overview

Altitude adjustments: A range of new developments are helping expand the sector in the face of exogenous challenges
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Like other bourses in the region, the Bahrain exchange faced strong economic headwinds in 2015 as a result of falling oil prices and the unrest in the wider Middle East. Nevertheless, a process of market development continues in the form of technical upgrades, legislative improvements and a steady stream of new investment instruments. As regional competition for liquidity intensifies, the exchange authorities are banking on these important enhancements to attract retail and institutional investors…

Viewpoint

Challenging times: Najla M Al Shirawi, CEO, Securities & Investment Company, on the impact of low oil prices on the GCC’s capital markets
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The new era of lower oil prices is having considerable repercussions on the GCC’s capital markets. Both equity and debt capital markets are undergoing challenging times affected by a changing macroeconomic environment and the increasing risk averseness of market participants. In the equities space, corporate earnings have already started seeing the impact of low oil prices in the first nine months of 2015, declining by about 8% year-on-year. Furthermore, analysts are lowering their earnings forecasts…

Analysis

Public outreach: A multi-faceted approach to spreading awareness of the bourse’s offerings
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While Bahrain continues to raise the profile of its bourse through cooperation with regional and global markets, it is also making strenuous efforts to heighten awareness of the advantages of investment among the local population. To do so, it has taken a multi-faceted approach. Social Media Understandably given the nation’s internet penetration rate of around 96%, social media platforms are playing a large part in the outreach strategy of the Bahrain Bourse (BHB), and as a result some recent…

Analysis

A two-pronged bid: Moves to expand stock market appeal
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A push to bring new products and services to the stock market is being steered by the Central Bank of Bahrain (CBB), which regulates the country’s financial services industry. The launch comes against a backdrop of reforms, which marks part of a broader, two-pronged bid to strengthen the position of the Bahrain Bourse (BHB) at home and boost its appeal abroad. Addressing a regional equities summit in Manama in April 2015, Rasheed Al Maraj, governor of the CBB, said the bank had increased its focus…

Analysis

Strong potential: Equities
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The Bahrain Bourse (BHB) was established in 1987 and commenced operations in 1989, with only two stocks trading. Since then, the bourse has grown to include 46 common stocks (including two closed for trading, and two non-Bahraini companies listed on the exchange), government bonds and mutual funds. The market is serviced by 12 brokers, of which three are individuals. Securities and Investment Company (SICO) is the largest broker in the kingdom. According to Bloomberg, the market capitalisation of the Bahrain Index (BHSEASI) stood at $17.1bn at the end of October 2015. The index – a capitalisation-weighted index of all Bahraini public companies…

Analysis

Tapping the markets: Bonds
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The kingdom of Bahrain (rated “BBB-”) has developed into a seasoned and popular issuer, tapping local and international capital markets in 2015 for a record amount of debt. Bahrain raised 800m in Bahraini dinars and 1.5bn in US dollars, as the kingdom sought to strengthen its economy and finance its growing deficit, which is estimated to reach 12% of GDP in 2015 amid falling oil prices. The timeline of the funding was well planned, as the kingdom, acting through the Central Bank of Bahrain, issued its debt across multiple tranches. These ranged from two-year to ten-year papers, with the government responding positively to regional demand for…

Analysis

A welcome addition: Real estate investment trusts
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The Bahrain Bourse (BHB) will soon be listing its first real estate investment trust (REIT). This will be a welcome addition for investors seeking diversification and exposure to the Bahrain real estate sector, with this segment currently limited to Seef Properties, a malls operator. A REIT is a regulated legal structure that holds income-generating real estate assets, and issues units to investors. The unit holders effectively become the beneficial owners of the real estate assets in proportion to their unit holding. Income for a REIT comprises rental payments from the properties net of the associated expenses. REITs are a unique investment class…

Analysis

A leader in its field: Islamic finance
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In addition to conventional instruments, the Central Bank of Bahrain (CBB) has introduced various Islamic products to support sharia-compliant banking. The kingdom has a high penetration of Islamic financial institutions, comprising six sharia-compliant retail banks and 18 wholesale banks, along with seven takaful (Islamic insurance) companies. A New Tool The CBB launched a new sharia-compliant liquidity management instrument for Islamic retail banks, known as wakala, during the second half of 2015. This aims to help local Islamic retail banks park their surplus liquidity with the CBB. The CBB announced that the wakala instrument is based on…