Capital Markets
From The Report: Bahrain 2017
View in Online Reader

The region’s exchanges have operated in adverse economic conditions since the decline of oil prices began in the second half of 2014, and the Bahrain Bourse is no exception. However, the apparent stabilisation of global oil prices in 2016 has brought a similar firming of the main index and, after a year of shrinking stock prices, some increasingly attractive valuations. The larger story of 2016, however, has been of some important structural advances, such as the introduction of real estate investment trusts and the emergence of a vibrant secondary debt market. More legislative and infrastructural developments due in 2017 promise to sustain this forward momentum.

This chapter contains an interview with Najla M Al Shirawi, CEO, Securities and Investment Company.

Articles from this Chapter

Overview

The next stage: Several innovations are in the pipeline, as the authorities work to further deepen the market
OBG
plus

The region’s exchanges have operated in adverse economic conditions since the decline of oil prices began in the second half of 2014, and the Bahrain Bourse (BHB) is no exception. However, the apparent stabilisation of global oil prices in 2016 has brought a similar firming of the main index and, after a year of shrinking stock prices, some increasingly attractive valuations. The larger story of 2016, however, has been of some important structural advances, such as the introduction of…

Viewpoint

More to offer: Najla M Al Shirawi, CEO, Securities & Investment Company, on the diversification of Bahrain’s economy beyond oil and gas
OBG
plus

Viewpoint: Najla M Al Shirawi While low oil prices continue to limit the region’s – and in particular Bahrain’s – economic growth, non-oil growth appears to be generally resilient. Bahrain’s real GDP growth in the first half of 2016 reached 3.5% year-on-year (y-o-y), while the Bahrain Economic Development Board (EDB) forecast growth in 2016 would slow to 2.8%. Non-oil GDP growth in the first half of 2016 reached 3.1% y-o-y, driven mainly by the construction sector, which grew by 5.7%,…

Analysis

Key concern: Regulator takes steps to boost liquidity on the exchange
OBG
plus

Generating liquidity growth is a concern for the management and regulators of exchanges across the region. As markets from Kuwait to Muscat battle for investment flows, the long-term future of the Bahrain Bourse (BHB) depends upon its ability to attract fresh capital to its increasing array of investment instruments. Most of its major innovations in terms of products and services over recent years have been carried out with the question of liquidity in mind, including the transition to the…

Analysis

A welcome option: Real estate investment trusts hold promise for future trading
OBG
plus

Real estate investment trusts (REITs) are popular investment instruments in developed markets, but a relatively new phenomenon in GCC exchanges. Nasdaq Dubai became the first exchange in the region to list a REIT in 2014, and in January 2016 Saudi Arabia’s market regulator approved the listing rules that will govern the instruments in the kingdom. Bahrain, however, has moved more quickly than its giant neighbour to introduce REITs to the Bahrain Bourse (BHB). The topic of REITs has been…

Analysis

Strong demand: Bonds
OBG
plus

The Bahraini bond and sukuk (Islamic bond) market has been the best performing GCC fixed-income market up until December 2016, returning an average of 8.7% despite a turbulent period which saw oil prices fall to as low as $28 and the country stripped of its investment-grade, long-term issuer rating. Investors who participated in the 2016 taps of the 2021 and 2026 US-dollar maturity bonds would have accumulated a total wealth of 9.4% and 15.1%, respectively, as of December 31, 2016, while those who invested in the longer-dated 2044 maturity paper would have made just under 11.8% over the same time period. The demand has been particularly…

Analysis

A developing market: Equities
OBG
plus

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 41 common stocks (including three closed for trading), government bonds and mutual funds. The market is serviced by twelve brokers, of which three are individuals. The Securities & Investment Company (SICO) is the largest broker in the kingdom. According to Bloomberg, the market capitalisation of the Bahrain Bourse All Share Index (BHSEASI) stood at BD7.2bn ($19.1bn) at the end of December 2016. Banking and financial services constituted the largest slice of the index, with a weighting…

Analysis

Popular alternative: Real estate investment trusts
OBG
plus

As investors open up to this alternative investment class, real estate investment trusts (REITs) are gradually gaining traction within the GCC. In 2016 we saw the listing – but not an initial public offering (IPO) – of Riyad REIT at Tadawul, as well as the IPO of Eskan Bank REIT, which completed its offering on December 6, 2016 and listed on the Bahrain Bourse on January 2, 2017. NEW LAUNCHS: Eskan Bank Realty Income Trust (EBRIT) is sharia-compliant and the first listed REIT on the Bahrain Bourse. EBRIT, at the end of November 2016, offered for sale 144m units at IPO price of BD0.10 ($0.27) per unit; the issue was more than 95% subscribed…