2017 was a positive year for the global stock markets, and the majority of the GCC financial markets’ and Bourses’ performance increased mainly due to the recovery of the oil prices and regained investors’ confidence. Accordingly, Bahrain Bourse achieved an exceptional trading performance ranking 2nd among GCC stock markets and 4th across the MENA region.
Bahrain All Share Index closed at +9.12%, and Bahrain Islamic Index closed at +19.73% compared to its closing in December 2016. Trading volume stood at 1.129 billion shares representing 53% YoY increase, and trading value for the year stood at BD 211 million representing 70% YoY increase. The number of transactions also increased by 84% compared to the transactions executed in 2016.
During the year, Bahrain Bourse made achievements on various fronts, mainly focusing on initiatives aimed at growing the capital market and enhance its depth and sophistication, which includes the listing of the first REIT by Eskan Bank ‘EBREIT’. The listing of the REIT goes in line with BHB’s efforts to enhance Bahrain Bourse’s liquidity and depth, thereby strengthening its competitiveness and attracting local, regional and international investors. To cap an eventful year, the number of listed bonds/sukuk as of 31st December 2017 reached 13 issues with a total value of US$ 6.084 billion, and 5 T-Bill issues with a total value of BD 546 million.
One of the most remarkable regulatory achievements in 2017 was the Inauguration of Bahrain Clear, licensed by the Central Bank of Bahrain to operate as a full-fledged clearing house, to become independently responsible for clearing, settlement and central depository services. Bahrain Clear’s main objective is to enhance and diversify the post-trade services and provide services that are in line with those applied in the advanced markets, which ensures quality of services offered to investors in accordance with international standards.
In line with BHB’s efforts to offer alternative investment options for issuers, Bahrain Bourse launched Bahrain Investment Market aimed at attracting fast-growing companies seeking growth capital to list and addressing the increasing demand of global investors to invest in companies in the region. Four companies (KPMG, Keypoint, BDO Consulting, and SICO) were Authorized as Sponsors in the Bahrain Investment Market to assist companies in listing by ensuring all pre-listing requirements and post-listing documentation and disclosures are continuously met. An agreement was also signed with Tamkeen to support businesses and enterprises cover the costs associated with listing and appointing a Sponsor.
2017 also marks the adoption of the Market Making Guidelines aiming at increasing Market Makers’ efficiency and maintaining market integrity as well as investors’ protection. This regulatory advancement has enabled Bahrain Bourse to license the second market maker, Mubasher Financial Services, to commence its market making services to its respective clients.
To enhance service offerings to investors, Bahrain Bourse launched ‘Bahrain Trade’, an innovative online trading solution that enables investors to trade on Bahrain Bourse online via "Bahrain Trade" platform. Accordingly, Khaleeji Commercial Bank joined the Bahrain Trade network as the first participating financial institution to provide this service to their respective client base. The launch of Bahrain Trade goes in line with BHB’s belief in investing in the latest technological advancements and applications to meet investors’ ever-changing expectations and at the same time, encourage an active retail participation in the market.
In line with Bahrain Bourse efforts to continuously develop its technological infrastructure to enhance its competitiveness to attract further investments instruments and increase and develop the quality of services offered to investors and issuers, BHB upgraded its NASDAQ X-Stream Trading System to cater for multi-asset class solutions including a better improved multi-currency platform.
Additionally, Bahrain Bourse’s e-services have been launched on Bahrain eGovernment portal to all investors and stakeholders, allowing registered investors to view their investment portfolios and details of their securities’ transactions in a timely and easy manner.
Financial literacy forms an important pillar of our strategy. The financial literacy pillar branches out to three core programs: TradeQuest, Investment Academy, and Smart Investor. Bahrain Bourse successfully kicked-off its 20th year of the TradeQuest program for schools that aim at raising investment awareness among high school and university students. Over the years, Bahrain Bourse has trained under the TradeQuest program more than 1,300 students across 18 schools and 5 universities covering both private and government educational institutions across the Kingdom.
As part of our endeavor to promote investor education & financial literacy, the Investment Academy was officially launched under the umbrella of Bahrain Bourse and Bahrain Institute of Banking and Finance (BIBF). “The Investment Academy” aims at offering technical market know-how targeted towards capital market practitioners with innovative teaching methods and technologies. The Academy also offers public awareness sessions, professional certifications, and aims to be positioned as a regional training center and hub for capital markets.
Bahrain Bourse has also signed a cooperation agreement with the Ministry of Education that aims at enhancing joint-cooperation in areas related to spreading investment awareness among students such as the launch of The “Smart Investor” initiative. The Smart Investor is an awareness program targeted towards elementary students with the objective of introducing the basic concept of saving & investment among students by using various tools, projected to be rolled out in the academic year 2018/2019.
As for the financial performance of Bahrain Bourse in 2017, BHB reported an increase in its gross revenue by 4.2% from BD3,039,480 in 2017 compared to BD2,917,421 in 2016, while the total expenses reached BD4,544,982 in 2017 in comparison to BD3,765,016 in 2016. BHB recorded a deficit of BD1,505,502 in 2017 as compared to BD847,595 in 2016.
BHB’s total assets decreased to BD6,302,569 compared to BD7,640,717 in 2016, while the total liabilities in 2017 were BD594,488 against BD427,134 in 2016. Shareholders’ equity also decreased from BD7,213,583 as of 31st December 2016 to BD5,708,081 as of 31st December 2017 due to our commitment to cost discipline in relation to recurring costs to reduce financial burdens in the future. Hence, BHB reduced lease occupancy space and certain fixed assets were excluded, which in return negatively impacted BHB’s performance this year but is projected to increase BHB’s profitability in the future.
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 in developing the Bourse and their continuous support. I also thank Bahrain Bourse’s management and employees for their dedication and hard work, wishing them greater success in further developing Bahrain 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