FEDERATION OF EURO-ASIAN STOCK EXCHANGES
SEMI ANNUAL REPORT OCTOBER 2006
BAHRAIN STOCK EXCHANGE
Rasheed Mohammed Al-Maraj
Chairman
In continuation of the robust performance the
Bahrain Stock Exchange (BSE) and the other
Bourses in the Region recorded in the year
2003, many positive factors continued to
influence the performance of these markets
in the year 2004. High oil prices have made it
possible for more government spending on
the infrastructure and has in turn led to
activation of the various sectors of the
economy in the countries of the region.
The low interest rates environment and the
narrow margins of interest rate movement
during the year as well as the good results
posted by many public share-holding
companies, have both played a significant
role in directing more liquidity to the stock
exchanges, which reflected positively on the
volumes and prices of most of the listed
shares traded in the BSE and the other
GCC Bourses.
As part of the efforts of the Bahrain Monetary
Agency (BMA), in its capacity as the
regulatory authority in charge of the
supervision of the Capital Market Sector in
the Kingdom of Bahrain, and in an attempt to
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.
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Bahrain First Capital Market Forum was
organized with the aim of promoting the
investment environment in the Kingdom
both regionally and internationally, on all
regulatory and technical levels.
support this sector and enhance its
competitiveness, an action plan was
launched during the year 2004 to
complement the regulatory and supervisory
framework for this sector in line with the
international standards set by the
International Organization of Securities
Commission. Under this initiative BMA has
also issued the Disclosure Standards for
companies listed in the BSE as well as the
Directives relating to the prevention &
prohibition of Money Laundering at the BSE.
BMA also issued the draft of Securities
Regulations in a consultation paper intended
to solicit the views of the industry
participants in this sector and the concerned
parties before it is published in a final form.
Within the framework of its strategy aiming at
the promotion of the Kingdom of Bahrain as
a leading regional centre for listing and
trading in debt securities, BMA issued the
“Guideline for the Issuing, Offering And
Listing of Islamic Debt Securities” in the BSE.
The new guideline puts the BSE in the
limelight and presents it as a reliable source
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 17th June 1989
with 29 companies listed on the Exchange.
of debt origination on which institutions may
consider as means of expanding their
business or increasing capital.
To enhance the position of Bahrain as
a leading financial center in the Region,
the Bahrain First Capital Market Forum was
organized with the aim of promoting the
investment environment in the Kingdom
both regionally and internationally, on all
regulatory and technical levels. The forum
was attended by a number of senior experts
in the capital markets from all over the world.
The BSE has accomplished many
achievements during the previous year,
and we are confident of its ability to steadily
take all possible measures to boost the
BSE role and contribution to the economic
development process in the Kingdom,
building on the sophisticated and developed
infrastructure of the capital market, on one
hand and the high technological edge
available on the other in order to provide
alternative investment options that are
attractive to local and foreign investors alike.
FUTURE OUTLOOK
It is expected that the BSE will witness
growth in the number of listed companies
during 2006. Due to these listings, more
liquidity will be pumped in the market which
will widen and expand ownership and lead
to more activity in the market.