Fouad Rashid on the Bahrain stock exchange | Bahrain Bourse | Video

Transcript

The Bahrain stock exchange, now the Bahrain Bourse, opened in 1989 with just under 30 listed companies. Now the exchange lists around 50 companies, and that number is on the increase. World Finance interviews Fouad Rashid, Director of Bahrain Bourse, to find out exactly what the stock exchange is, how it performed in 2013, and what future trading initiatives are being implemented

World Finance: Well Fouad, in brief, what exactly is the Bahrain Bourse?

Fouad Rashid: Bahrain Bourse is regulatory organisation, supervised by the central bank of Bahrain. There are several instruments that are listed on the exchange, including equities, we have around 45 companies that are Bahraini, and five companies non-Bahraini. On the bonds and Sukuk, we have several bonds and Sukuk, and their total size is around $3bn, plus mutual funds are listed on the exchange as well.

[T]he market is open for foreign ownership up to 100 percent, as well as there are no taxes imposed on the development, nor on capital gains

World Finance: What do you think is the value proposition of the Bahrain Bourse?

Fouad Rashid: Bahrain is known to have a solid regulatory framework. On the other hand, the market is open for foreign ownership up to 100 percent, as well as there are no taxes imposed on the development, nor on capital gains. There are several custodians, international and regional, operating in Bahrain, such as HSBC, Citi, and Standard Chartered.

World Finance: Well like many bourses in emerging markets, trading can be light, which might in turn discourage investors. How do you address this?

Fouad Rashid: Bahrain Bourse is an institutional development market. More than 40 percent of the shares listed on the exchange are owned by non-Bahrainis. We have adapted a comprehensive strategy, two years ago, to develop the exchange, all aspects of work in the exchange, and liquidity was one of the issues we had. Now since then we have implemented several initiatives, we are meant to introduce an online incentive program, specifically for retail investors to participate using the online services, and at the same time we have extended the length of the trading hours. Not only this, we are very soon going also to allow foreign brokers to become our members, provided they are licensed by their juristic bodies. They can trade remotely without having a physical presence in Bahrain.

World Finance: So how are you going about boosting listings? 

Fouad Rashid: We have just reached the finalised drafting the new listing rules for small to medium size companies and once this is launched, we will expect that to happen this year, we are planning to have an extensive marketing and produce in Bahrain in the region this year, to promote the new listing and to encourage the companies to be listed on our exchange.

I can say that we have seen a pickup in the
trading activity

World Finance: Well at the end of 2013 you rolled out two initiatives to raise transaction levels, including increasing trading hours, how successful has this been?

Fouad Rashid: It’s only three months since we applied this extension, and I can say that we have seen a pickup in the trading activity. We are going to evaluate more and see what benefits that extension had on the market to take further actions.

World Finance: So how did the Bahrain Bourse perform in 2013, and what are your expectations for the new year ahead?

Fouad Rashid: Last year was a good year for us, and in all aspects of it. First the Bahrain oil share index was up by 17 percent, the value of transactions increased by 100 percent, and the value of transactions also were up by around 200 percent. This year, for the first two months, our index is up further by 10 percent, and also we are seeing more of a pickup in the trading activities.

World Finance: So finally, what other initiatives were implemented?

Fouad Rashid: On the technical side, we have signed a contract with NASDAQ OMX to replace the current trading systems to another system called X-stream, a more sophisticated trading system. On the awareness side, we have a joint annual program on investor relations. Also the last year we have introduced a program called TradeQuest. Now this program is for university students to increase their awareness on the operations of exchanges, Sukuk market, as well as providing the virtual trading. On the corporate governance aspect, we have established and implemented a comprehensive corporate governance policy. Bahrain Bourse promotes corporate governance within listed companies.

World Finance: Fouad thank you.

Fouad Rashid: Thank you, thank you very much.