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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT APRIL 2007
BAHRAIN STOCK EXCHANGE
Rasheed Mohammed Al-Maraj
Chairman
The capital market sector in the Kingdom of
Bahrain has witnessed the beginning of an
active move in the primary market as some
IPOs took place and were well received.
GCC countries have made balanced growth
during 2005 enhanced by the increase of oil
prices which supported the policy of GCC to
diversify its sources of income, develop the
non-oil sectors, improve the infrastructure
and rationalize national current accounts,
balance of payments and state budgets.
On the Capital Markets front, all bourses
have recorded strong gains enhancing the
investors' confidence with the unprecedented
levels recorded by most indices during 2005.
The Kingdom of Bahrain has continued its
efforts to enhance the investment
environment in order to increase the
contribution of the private sector in the
economic development process, in a way
that increases the competitiveness of the
Bahrain's economy to attract investments
and reflects the improvement of Bahrain's
competitive position in many reports that
were released by international rating
agencies concerned with monitoring the
performance of economies worldwide.
The signing of the Free Trade Agreement
(FTA) with the United State of America is
considered one of the most important events
to Bahrain economy during 2005. The
agreement is expected to open a new
horizon of mutual cooperation with the
biggest economy in the area of trade and
investments. It will also improve and
enhance the business environment in
Bahrain, especially the non-tax environment
that Bahrain enforces on income and capital
gains.
Similar to other GCC countries, the Capital
Market Sector in the Kingdom of Bahrain has
witnessed the beginning of an active move in
the primary market as some Initial Public
Offerings (IPOs) took place and were well
received in a way that reflected the high level
of liquidity available locally and regionally.
Based on its strategy to develop the Capital
Market sector, the Bahrain Monetary Agency
(BMA) and Bahrain Stock Exchange
assigned the World Bank to prepare a
comprehensive study to develop the capital
market sector in the Kingdom of Bahrain.
A Memorandum of Understanding (MOU)
was signed by the Bahrain Monetary Agency
and Bahrain Stock Exchange to coordinate,
put in practice and implement directives and
instructions issued by BMA which relate to
the capital market sector until the issuing of
the Central Bank Law.
HISTORY AND DEVELOPMENT
It was back in 1920 that the first branch of a
commercial bank (Standard Chartered Bank
then Eastern Bank) opened its doors in
Bahrain, the first to do so in the region, in
order to facilitate the business community at
that time. By 1957, Bahrain had its first
public shareholding company, the National
Bank of Bahrain. However, it was not until
the late 1970s and early 1980s that Bahrain
realized there was a growing need for an
organized stock market, due to the growth
provided by the oil price boom in the region.
As a result, the Government, in cooperation
with the International Finance Corporation
(IFC), prepared a feasibility study
highlighting the importance of establishing
an official stock market in Bahrain. So in
1987, Amiri Decree No. 4 was issued,
establishing the BSE, which officially
commenced operations on 17 June 1989
with 29 companies listed on the Exchange.
FUTURE OUTLOOK
During the year 2007, new listings are
expected to take place on Bahrain Stock
Exchange (BSE) which will provide more
investment opportunities for investors and
create more activity in the exchange. More
effort will be put into establishing BSE as a
regional hub for listing and trading of mutual
funds. BSE is also looking for more
cooperation with other markets to open new
horizons of cooperation in order to gain and
exchange experience and expertise.
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