JEDDAH, 5 February 2006 — The Bahraini stock market continued to surge in 2005. The overall improved sentiments on the macroeconomic front, strong oil prices, remarkable performance of banks and companies led to healthy gains. Both local and regional investors increased their investments in stock markets and in real estate sector, according to a report by the Kuwait-based Global Investment House (Global).
The “Global” Bahrain Index stood at 172.44 points and recorded a handsome YTD gain of 23.70 percent in 2005. The Bahrain All Share Index reached its highest level on Nov. 17, 2005.
The market capitalization at the end of 2005 was BD6.55 billion as compared to BD5.10 billion at the end of 2004.
However, compared to other Gulf Cooperation Council (GCC) markets, Bahrain still reported slow growth. By the end of 2005, Saudi Arabia registered the highest growth of 103.70 percent followed by UAE (102.90 percent) and Qatar (83.50 percent). In terms of market capitalization, Bahrain ranks fifth among the GCC countries.
On the new listing front, Bahrain witnessed two companies, Nass Corporation under the service sector and Banader Hotels Company under the Hotel and Tourism sector. These increased the total number of listed companies on the BSE to 47. However, the Global report said the number of new listings to increase this year and will provide investors with new investment avenues.
The trading activity has seen improvement. The aggregate volume of shares traded in 2005 was up by 36.2 percent to 458.31 million as compared to the aggregate volume reported in 2004. About 35.8 percent of the total trading in 2005 on the bourse took place in the months of October and November, which was much higher than the average monthly volume of shares traded during the year. The aggregate value of shares traded in 2005 amounted to BD268.09 million, which has increased by 53.6 percent over full year figure of 2004.
At the end of November, the market breadth was heavily skewed in favor of advancers, as 29 stocks reported gains while 12 stocks suffered losses. The price of 6 stocks remained unchanged during the period. Amongst the gainers, Bahrain Middle East Bank (BMB) registered a whopping growth of 488.24 percent at the end of 2005.
The banking stocks recorded good performance. The BSE commercial banks index gained 14.28 percent in 2005. Bahrain Islamic Bank (BISB), recorded stellar performance in the first nine months of 2005 with its net profit rising by 62.59 percent to BD5.14 million. As a result of this outstanding performance by BISB, the stock edged higher by 47.46 percent in 2005. The other notable gainer in the banking sector was Ahli United Bank, which notched up a gain of 14.63 percent on the back of improved results.
Remarkable performance was also shown by the investment sector, which reported YTD gains of 48.05 percent. This was a result of excellent financial results posted by the investment companies. BMB nine-month profits improved to BD3.66 million as compared to a loss of BD1.39 million in the corresponding period last year. All the companies with the exception of Shamil Bank of Bahrain stock reported gains.
The hotel and tourism sector index in Bahrain showed an increase of 22.94 percent.
However, Bahrain Stock Exchange remains one of the cheapest markets in the region. The price/earnings multiple of the Bahraini stocks is low in comparison with other GCC markets and other emerging markets as well. Despite its unimpressive performance as compared to its regional peers, Bahrain equities offer one of the highest dividend yields of around 3.19 percent, available in the region.
Government gilts continued to dominate the listed bonds market in Bahrain. However, gradually there have been some bonds from the corporate sector as well. Bahrain Commercial Facilities Company (BCFC) has two bonds listed on the BSE, while in 2003 Aluminum Bahrain’s (Alba) bond issue also got listed on the exchange.
The total listed Bahraini bonds amounted to about $2.5 billion as of November 2005 - representing about 22.9 percent of the gross domestic product (GDP) of Bahrain.
