The performance of most of the bourses and stock markets in the region experienced a negative trend due to the sharp decline in oil prices. This led investors to become increasingly cautious and vigilant regarding the situation and accordingly reflected on the performance of all indices in GCC bourses and some of the Arabian bourses and financial markets. The volume of trades also declined significantly compared to the trades in 2014.
Bahrain Bourse (BHB) was not an exception from the overall situation that dominated over other bourses despite the good performance reported by the majority of Bahraini public shareholding companies listed at the bourse. This year was a difficult year due to the abovementioned factors where all trading activity indices declined in comparison to 2014. Bahrain All Share Index closed at 1,215.89 points decreasing by 14.77% compared to its closing in 2014. The value of shares traded during 2015 also dropped by 60%, and the volume of shares traded declined by 54%, while the number of transactions executed decreased by 13% compared to 2014.
Despite the difficult market conditions on the trading level, we at Bahrain Bourse continued developing and improving the infrastructure of the bourse in different aspects including the legislative and technical infrastructure. This has been done to implement the plans and strategic programs that aim at developing the bourse and enhancing its capabilities to serve the development of the Kingdom of Bahrain by comprehensively working together with related government institutions to achieve the prosperity of the Kingdom of Bahrain’s economy. In addition, all procedures have been taken to facilitate the accessibility of issuers of securities and investors to the opportunities available at the bourse with a reasonable cost.
In terms of the legislative front, several key amendments have been made on the listing requirements of the listed shareholding companies and the companies that intend to list their shares in the future. Those amendments were considered a milestone in the history of the capital markets sector in general and the bourse in particular, most importantly the amendment regarding approving the CSD electronic registry for trading purposes and proving ownership, as well as registering and depositing the issued shares in the Clearing, Settlement, Central Depository & Registry system in the Bourse, provided that the establishment and management of the shareholders’ record in the company is in line with the electronic registry system licensed by the Central Bank of Bahrain and approved by the bourse. The amendments also included that listed companies should have a minimum free float of 10% of its the issued and fully paid shares.
In line with the bourse’s efforts to broaden the market and increase its depth to provide more instruments and investment options for investors, the listing and trading guidelines of REITs and T-Bills has been approved. This will open the door for investors to invest in these markets with reasonable costs, fair returns, and low-risk.
In order to support and enhance the Kingdom of Bahrain’s position as a leading regional and international hub in the provision of Financial Islamic Services, Bahrain Bourse launched this year Bahrain All Share Islamic Index to act as a standardized tool to measure the fluctuations of investment portfolios in the shares of listed companies computed within the Islamic Index. On the day of the launch, the index included 17 companies, all of which their activities comply with the Shari`ah's standards and regulations set by the Bourse's Shari`ah advisor for the programs, services, and Islamic financial solutions of the bourse. BHB has set a number of technical and financial standards to determine the companies that are computed within the index in which the composites of the index will be reviewed periodically.
In line with the joint cooperation and coordination between the Central Bank of Bahrain and Bahrain Bourse and for the first time among stock exchanges and financial markets in the Middle East, a new mechanism was launched to allow individual investors to purchase government bonds and sukuk issued by the CBB from the primary market and trade them (buy & sell) in the secondary market of the debt market at BHB. This was feasible in the past because this market was limited to financial institutions, banks, and big companies only. The mechanism allows investors to directly contribute to the government’s infrastructure projects and receive reasonable returns by investing in them.
In addition, Bahrain Bourse in cooperation and coordination with the Central Bank of Bahrain has undertaken all the legislative and technical procedures for launching the Treasury Bills Market that is expected to be launched during the first quarter of 2016. We expect that this market becomes quite active especially that this is considered one of the leading initiatives on the stock markets level in the region given the large issues that are expected to list once the market is launched.
With regards to listing at BHB, four sukuk issues, issued by the Central Bank of Bahrain on behalf of the government of the Kingdom of Bahrain have been listed with a total value of BD700 million, along with Government Development Bonds with a total value of BD350 million.
The Bourse’s efforts in spreading investment awareness continued in which several programs and awareness sessions have been organized for various categories of citizens and residents. Those awareness sessions contributed to enhancing the knowledge on the fundamentals of investing in securities to a large category of citizens and residents.
Within the bourse’s efforts to enhance its presence among renowned international institutions, BHB became an affiliate member of the IOSCO. The IOSCO is the premier international body of securities regulators and administrators and includes most of the leading organizations and regulatory authorities of financial markets in most countries. This was a remarkable achievement for BHB that will enhance its credibility on the international level and supports its capability to benefit from the experience of the IOSCO in continuing developing the legislative and technical infrastructure of the capital markets sector in the Kingdom of Bahrain.
Bahrain Bourse also hosted in 2015 the Arab Federation of Exchanges (AFE) Annual Meeting in its 40th Year and the rotating presidency was handed over to Saudi Stock Exchange “Tadawul”.
In addition, the bourse hosted the Arab Federation of Exchanges (AFE) Annual Conference during 22-23 April 2015 that is considered one of the biggest specialized conferences in the capital markets sector organized in Arabian Countries, and was attended by more than 450 specialists from all over the world. In two days, several topics and issues related to investment in stock markets were discussed along with ways to improve liquidity in those markets. The conference also discussed ways to develop the IPO process in the Arab Financial Markets and increase the awareness of technological advancements in the equities field.
This year, Bahrain Bourse was honored by hosting the celebration of Bahraini Women’s Day that was has held under the patronage of Her Royal Highness Princess Sabeeka bint Ebrahim Al-Khalifa, Wife of the King of the Kingdom of Bahrain and President of the Supreme Council for Women themed “Women in the Financial and Banking Sector”. On that day, HRH Princess Sabeeka bint Ebrahim Al-Khalifa honored more than 75 women who have contributed with their achievements to support and enhance the Kingdom of Bahrain’s position as a leading financial center regionally and internationally.
With regards to next year’s planned projects, BHB will focus on several projects including establishing a Bahraini CSD Company, launching Bahrain Investment Market, introducing margin trading, launching markets for new investment instruments, and organizing promotional visits to attract more investments and listings to the bourse along with launching various awareness programs in cooperation with related institutions and bodies.
Looking into Bahrain Bourse’s financial performance this year, BHB’s total revenue was BD2,843,480 compared to BD4,267,413 in 2014, while the total expenses reached BD3,864,377 in 2015 in comparison to BD3,612,873 in 2014. BHB recorded a deficit of BD1,020,897 as compared to a profit of BD654,540 in 2014.
The Bourse’s total assets decreased to BD8,522,869 compared to BD9,923,708 in 2014, whereas the total liabilities in 2015 were BD461,691 against to BD841,633 in 2014. Shareholders’ equity also decreased from BD9,082,075 in 2014 to BD8,061,178 in 2015 due to the decrease in the government’s support in 2015 by 72% compared to 2014.
On behalf of myself and Bahrain Bourse’s employees, I would like to express my sincere thanks and gratitude to His Majesty King Hamad bin Isa Al Khalifa, and to His Royal Highness Prince Khalifa bin Salman Al Khalifa, Prime Minister, and His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince, Deputy Supreme Commander and First Deputy Prime Minister of the Kingdom of Bahrain for their continued support for the Bourse and its members.
I would also like to express my thanks and appreciation to the Chairman and members of BHB’s Board of Directors for their efforts to develop the Bourse. I also thank the Bourse’s management and employees for their dedication and hard work, wishing them greater success in developing the Bourse and achieving its vision, mission, and objectives in the coming period. I would also like to extend my thanks to the listed companies and brokerage firms for their support and cooperation.
Sh. Khalifa bin Ebrahim Al-Khalifa
Chief Executive Officer