JUNE 2013 - FEAS

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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013BAHRAIN BOURSEYusif HumoodChairmanBahrain Bourse continued the developmentof its trading mechanisms in a way that willattract different segments of investors andclients, and increase their profitability.Despite the signs of relative recovery from theglobal financial crisis that had an impact ondifferent countries worldwide in 2008 along withthe increase in oil prices during the second halfof 2009, the response of the market indicesin the region to this recovery varied amongmarkets. The reasons for such variation arepartly psychological reasons, and the other partgoes back to the distinctive characteristics ofeach market that differentiates one market fromanother.The performance of Bahrain All Share Index thisyear and the volume and value of shares tradedreflects the psychological state that prevailedamong investors at Bahrain Bourse resultingfrom the consequences of the crisis in spiteof the good financial results reported by themajority of companies listed at the Exchange.This has led to a 19.17% drop in the indexcompared to its closing at the end of 2008.In line with the development strategy approvedby the Board of Directors of Bahrain Bourse fiveyears ago, one of the major decisions in thehistory of the capital markets’ sector was madewith the issuance of Resolution No. (57) of 2009in respect of corporatizing the Exchange andtransforming it to a shareholding company,paving the way to major legal, administrative,and technical modifications that would changehow the Exchange operates.Bahrain Bourse has completed the major partof its relocation project to Bahrain FinancialHarbour in 2009. The new premises havebeen equipped with advanced technology andsystems in a way that will enhance BahrainBourse’s competitiveness to provide moreservices. This will also enable Bahrain Bourseto provide the technical infrastructure thatwould encourage companies to benefit fromthese facilities.Bahrain Bourse continued the developmentof its trading mechanisms in a way that willattract different segments of investors andclients, and increase their profitability whentrading in the shares of listed companies at theExchange. In addition, the bourse widened itsscope of cooperation with leading regional andinternational financial institutions to be able toprovide its custodian services at the Exchangewith the aim of enabling local and foreigninstitutional clients to invest at Bahrain Bourseand benefit from the opportunities available.Looking into Bahrain Bourse’s financialperformance in 2009, the global crisis had aneffect on the financial status of the Exchangewhere the operating surplus activate revenuereported a deficit of BD 127,180 thousandcompared to the surplus in 2008. Theaccumulated surplus also decreased slightlyfrom BD 3,950,112 to BD 3,822,932, recordinga drop of 3.21%.On behalf of the members of Bahrain Bourse’sBoard of Directors and staff, I would like toexpress my thanks and gratitude to His MajestyKing Hamad bin Isa bin Salman Al Khalifa,King of the Kingdom of Bahrain and His RoyalHighness Prince Khalifa bin Salman Al Khalifa,the Prime Minister, and His Royal HighnessPrince Salman bin Hamad Al Khalifa, the CrownPrince and Deputy Supreme Commanderfor their guidance and continuous support ofBahrain Bourse.I would also like to extend my thanks to theCentral Bank of Bahrain’s Chairman andmembers of the Board of Directors for theirsupport of Bahrain Bourse. I would also like tothank the members of the Board of Directorsof Bahrain Bourse for their opinions andcontributions to the development of the boursein the previous years. I would also like to thankBahrain Bourse’s management and staff fortheir hard work during the year, hoping thatsuch efforts will continue to further develop theExchange.PAGE 22
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013BAHRAIN BOURSEHISTORY AND DEVELOPMENTBahrain Bourse (BHB) was established as ashareholding company according to Law No.60 for the year 2010 to replace Bahrain StockExchange (BSE) that was established in 1987.The first Bahraini Public Shareholding Companywas established in 1957. Since then, morelocal public shareholding companies began tooperate, reaching their peak in the beginningof the 1980’s. During this period, shares ofpublic shareholding companies were beingactively traded in a non-official market called “AlJowhara Market”. Such market soon collapsedalong with the collapse of the Souk Al-Manakhstock market crash in Kuwait at the beginning ofthe 80’s of the last century.Following the crash, the Bahraini Governmentin cooperation with the International FinanceCorporation (IFC) prepared a feasibility study toestablish an official stock market in Bahrain. Asa result of the recommendation of the study, theBahraini Government established Bahrain StockExchange in 1987 according to Amiri DecreeNo. 4. The Exchange officially commencedoperations in June 1989 with 29 Bahrainishareholding companies listed. The onlyinstruments traded at that time were commonshares.Since the bourse’s establishment in 1989(formerly Bahrain Stock Exchange), trading wasconducted manually through a system called“Auctional Trading” System. Using this system,the broker had to write the bid and offer ordersthat they receive from the investor on the tradingboards at the trading floor. The transaction takesplace when the bid and offer prices match.In 1999, BHB implemented the AutomatedTrading System (ATS) to carry out all thebourse’s transactions electronically, replacingthe old manual system.In 2002, the legislative and regulatory authorityand supervision of BHB was transferred fromthe Ministry of Commerce to the Central Bankof Bahrain (CBB) in which CBB regulates andsupervises all the bourse’s activities.With the development of the bourse,government institutions and companies startedissuing several investment instruments takingadvantage of the legislative and technicalinfrastructure established by the bourse. Sincethen, the bourse witnessed the listing andregistration of preferred shares, bonds, sukuk,and mutual funds, making it the first bourse tolist such instruments in the region.In 2010, Bahrain Bourse moved to its newpremises at Bahrain Financial Harbour afterpreparing the new premises with the latesttechnological equipment in order to supportthe bourse’s efforts to provide a variety ofadvanced services that satisfy issuers, brokersand investors.FUTURE OUTLOOKIn the year 2010, Bahrain Bourse will continueits efforts to attract more local, regional, andinternational mutual funds. The bourse willcontinue to attract more listed companies, bothlocal and international and will also seek morecooperation with stock exchanges worldwide,with the aim of exchanging information andexpertise. In addition, Bahrain Bourse willpursue strategic partnerships in many differentareas that we hope to add value to all partiesinvolved.Key Information ContactsCentral Bank of Bahrain www.cbb.gov.bh/cmsrule/bmaindex.jspMinistry of Finance www.mofne.gov.bh/English/eindex.aspBahrain Government www.bahrain.gov.bhEconomic Development Board www.bahrainedb.comCONTACT INFORMATIONContact Name Mr. Ali Mansoor E-mail info@bahrainstock.com Website www.bahrainstock.comPAGE 23
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