Global equity markets witnessed volatility and sharp declines during 2022, after demonstrating one of the biggest gains globally last year. This was mainly driven by the global inflation and unprecedented hike in interest rates as well as the impact of the Russia-Ukraine war, oil market prices, volatile global financial markets, and global supply chain disruptions. While GCC equity markets reported consistent gains at the beginning of the year, the gains were offset by losses for the rest of the year, resulting in a mixed performance for individual markets. The MSCI GCC Index and the S&P GCC Index ended the year with a decline of 6.4% and 8.1% respectively.
Bahrain Bourse's Market Performance
As the majority of GCC markets recorded slight gains by the end of the 2022, Bahrain Bourse ranked 3rd amongst GCC stock exchanges. Bahrain All Share Index closed at 1,895.26 points at the end of the year 2022, registering a growth of 5.45%. The market capitalization similarly increased from BD 10.82 billion in 2021 to BD 11.41 billion in 2022. However, the value of shares traded in 2022 decreased from BD 195.68 million in 2021 reaching BD 169.79 million in 2022, recording a decrease of 13.23%. The volume of shares traded also declined in comparison to 2021 by 47.27%, reaching 0.54 billion shares in 2022 compared to 1.02 billion shares in 2021. Similarly, the number of transactions declined by 16.79%.
Strategic Priorities
During 2022, Bahrain Bourse focused on strengthening its linkages and cooperation with GCC Markets by collaborating with Abu Dhabi Securities Exchange (ADX), Muscat Securities Exchange (MSX) and Muqassa, the Securities Clearing Center Company in Saudi Arabia, going in line with bolstering the goals and objectives set towards the Financial Services Sector Development Strategy 2022-2026 in terms of strengthening GCC linkages.
Launch of Tabadul Exchange Hub
The year 2022 marked a key milestone within the regional capital markets, the launch of the region's first digital exchange hub – Tabadul by Bahrain Bourse and Abu Dhabi Securities Exchange (ADX) in July 2022. Based on the mutual market access model, Tabadul enables investments across Bahrain Bourse and Abu Dhabi and enables investors to trade directly on both exchanges through licensed brokers in both markets.
Tabadul was the result of the signed strategic partnership agreement in November 2021 between ADX and BHB to implement a cross-border plan in trading and post-trading environments. The platform will support the continued sustained growth in both markets by expanding the respective investor bases and serving to meet the broadened horizons of investors. The launch of Tabadul reflects upon BHB's commitment to enhance coordination with GCC Bourses in line with the Financial Services Sector Development Strategy of the Economic Recovery Plan that prioritizes capital market development.
In October 2022, Muscat Stock Exchange joined the Tabadul platform following a cooperation agreement signing between Bahrain Bourse and Muscat Stock Exchange. The agreement aims to achieve synergies, enhance market liquidity and promote innovative products and services as well as facilitate trading of investors in both markets and support sustainable growth.
Arab Federation of Capital Markets Conference
During the year, Bahrain Bourse was honored to host the Arab Federation of Capital Markets Annual Conference titled ''AFCM Annual Conference: Bahrain 2022'', following the handover of the presidency of the AFCM from Saudi Arabia to the Kingdom of Bahrain. Organizing and hosting the Arab Federation of Capital Markets Annual Conference offered a unique opportunity for regional and international exchanges, brokerage firms, and regulators to discuss key capital market topics and exchange experience and expertise, and paved the way for further collaboration between key capital market participants to support the development of the capital markets on a local and regional level and streamline interconnectivity.
Regulatory Developments
In order to promote further transparency and fairness across the market, Bahrain Bourse implemented the Issuers Violations Framework in January 2023 which covers 19 violations. The Issuers Violations Framework stipulates the rules for imposing monetary fines and/or sanctions, and the violations framework that apply for non-compliance to the Listing Rules, and any other applicable BHB business rules, regulations and directives as deemed appropriate. The Administrative Fines framework falls in line with Bahrain Bourse's role as an SRO, and is in line with IOSCO's Principles of Securities Regulation pertaining to self-regulation.
Bahrain Private Market
The year 2022 witnessed the launch of Bahrain Private Market, a new comprehensive platform for closed shareholding companies that aims to provide a full suite of bespoke share registrar services in a secure and electronic format in accordance with issued Law No. (09) of 2022 in relation to commercial registration services published in the Official Gazette No. (3594). The platform will serve as a unique one-stop-shop for closed shareholding companies, which aims to provide a range of services and tailored solutions, as well as greater flexibility with the opportunity to trade shares between existing shareholders. The launch of Bahrain Private Market aims to provide a more transparent and efficient offering for closed shareholding companies, providing unique opportunities in the private company secondary trading market.
Awards
As a testament to Bahrain Bourse's ongoing commitment to further develop the capital market on various operational aspects, BHB received a total of four awards during the year 2022. For the 2nd consecutive year, BHB has been awarded by His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince, Deputy Supreme Commander of the Armed Forces, within the top government agencies awarded for their excellence in customer service for the year 2021. The award is a result of Bahrain Bourse's efforts to serve all parties related to the capital markets sector, and demonstrates its commitment to provide open communication channels to meet the needs of all stakeholders.
In addition, BHB has been accorded with two prestigious award for exemplary performance in the area of enhancing Sustainability and Financial Literacy awareness. Bahrain Bourse was named 'Sustainable Stock Exchange of the Year - GCC 2022' by Global Banking & Finance Review and 'Best Investor Awareness Financial Literacy Initiatives' – Stock Exchange – Bahrain 2022' by International Finance.
In recognition of Bahrain Bourse's continuous dedication over the years to contribute to the Kingdom's capital markets development, BHB was also awarded by Global Business Outlook for Outstanding Contribution to Capital Markets Development.
Financials
Bahrain Bourse achieved a net profit of BD 224,081. The total operating revenues amounted to BD 4.79 million in 2022 compared to BD 3.56 million in 2021, recording an increase of approximately 35%. The total operating expenses were BD 4.57 million in comparison to BD 4.01 million in 2021, reporting an increase of 14%. The year 2022 is an exceptional year for Bahrain Bourse. Our results are a testament to the progress of BHB over the years that has been focused towards cultivating capital raising and investment opportunities and enhancing operational efficiency. We believe that Bahrain Bourse's solid infrastructure, and optimistic strategy will drive more opportunities to the Bahraini capital market to achieve higher profitability in the upcoming years.
Acknowledgements
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 His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince, Deputy Supreme Commander of the Armed Forces, and Prime Minister for their continued support to the Bourse and its members.
I would like to extend my gratitude to H.E. the Minister of Industry and Commerce (the current and previous 'Shareholder') for their continuous support extended to Bahrain Bourse and Bahrain Clear during his tenure. I would also like to express my thanks and appreciation to the Chairman and members of BHB's Board of Directors for their unwavering support in developing the capital markets and their continuous oversight and guidance.
Bahrain Bourse's achievements would not have been possible without the continuous dedication and steadfast commitment of the team, whom have played a significant role in ensuring operational resilience during turbulent times.
I would also like to extend my deepest gratitude to our stakeholders and market participants including brokers, listed companies, custodians, investors, and brokerage firms for their continuous support and active engagement in further advancing the market.
Khalifa bin Ebrahim Al-Khalifa
Chief Executive Officer