All GCC equity markets reported record gains during 2021 and outperformed their global peers which was mainly driven by the rise of oil prices and the positive economic rebound following the roll-out of fiscal rationalization plans by governments during that period. The MSCI GCC Index and the S&P GCC Index ended the year with a yearly return of 34.85% and 35.19% respectively.
Bahrain Bourse’s Market Performance
Overall, 2021 saw a record growth for Bahrain Bourse with Bahrain All Share Index registering a growth of 20.64% in 2021, closing the year at 1,797.25 points, a 12-year high, while market capitalization of listed securities rose by 16.58% to reach BD 10.82 billion as of year-end. Similarly, Bahrain Islamic Index recorded a growth of 15.62%, closing the year at 751.72 points. The number of transactions also rose by 8.76%. On the other hand, the trading activity during the year decreased slightly in comparison to last year, where the value of shares traded fell by 8.05% to BD 195.68 million compared to BD 212.80 million during 2020, and the volume of shares traded declined by 15.79% to BD 1.018 billion shares during 2021 down by BD 1.209 billion shares in 2020.
During 2021, Bahrain Bourse continued to build its strong foundation fueled by supportive macroeconomics and strong oil prices, enabling us to focus on strategic priorities to sustain growth in line with the leadership’s vision and in line with the Economic Recovery Plan announced in October 2021, with a focus on Financial Services Sector Strategy and capital markets. Bahrain Bourse maintained business continuity and successfully achieved new milestones in 2021.
A high-level strategic partnership with Abu Dhabi Securities Exchange (ADX) was signed during the year with the aim of achieving synergies and greater cross border cooperation to enhance market liquidity, including direct market access and the issuance of Exchange Traded Funds (ETFs).
Adoption of Global Industry Classification Standard (GICS)
During the year, Bahrain Bourse also re-classified its sectors to adopt the Global Industry Classification Standard (GICS) for listed companies in July, as this major step comes in line with Bahrain Bourse’s strategy to enhance transparency and efficiency in Bahrain’s capital market and to meet best international practices. The industrial re-classification aims to aims to establish alignment with global industrial standards for classifying listed companies, provide better information to international investors on the performance of sectoral indices, and enable easier company and sectoral comparability with global peers as well as comparability between companies and sectors.
On the regulatory front, Bahrain Bourse issued amendments on its listing rules to further strengthen the regulatory oversight regime, which is yet another step towards enhancing market transparency and investor confidence within the capital market in the Kingdom of Bahrain. The amendments include the establishment of a Disciplinary Appeals Board to secure a comprehensive enforcement framework to settle disputes, govern, and take disciplinary action against market participants (including issuers and registered members at Bahrain Bourse) for enhanced accountability.
The year 2021 saw a very positive performance for the Murabaha market, further solidifying our position as a multi-asset market. For the year, Murabaha transactions in terms of value amounted to BD 2.96 billion, equivalent to a 199% growth compared to 2020 figures, and representing a total asset turnover of 40.25 multiples. Number of transaction amounted to 718 trades, equivalent to a 75% growth compared to 2020 figures. During the year 2021, two additional banks rolled out the Murabaha services to its underlying client base which includes: Gulf Finance House, and Ithmaar Bank, resulting in a total of ten local banks currently offering Murabaha services through Bahrain Bourse platform.
As we strive to raise the bar in corporate governance and sustainability, the year 2021 saw a remarkable achievement as Bahrain Bourse received three prestigious awards: “Best Corporate Governance” and “Work Life Balance” by Global Banking & Finance Awards and “Best ESG Initiative” Accolade by Pan Finance Awards. Those awards reflects upon Bahrain Bourse exceptional performance and commitment towards governance, transparency, and compliance, as well as our continuous efforts to promote responsible sustainability practices and ESG disclosure within the capital market.
Bahrain Bourse continued to strengthen its linkages with international institutional investors through virtual roadshow conducted in collaboration with HSBC, providing us with the opportunity to showcase key regulatory and market developments and plans to investors.
Bahrain Bourse reported an operating income of BD 3,556,874 (including the operating income and interest income) in comparison to BD 3,038,940 in 2020, posting an increase of approximately 17%. The total operating expenses amounted to BD 4,011,884 in 2021 compared to BD 3,621,214 in 2020, recording an increase of 8%. BHB recorded a deficit of BD 455,010 in 2021 compared to a deficit BD 659,337 million in 2020.
On behalf of myself and Bahrain Bourse’s employees, I would like to express my sincere thanks and gratitude to His Majesty King Hamad bin Isa Al Khalifa, and His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince and Prime Minister for their continued support to the Bourse and its members.
I would also like to express my thanks and appreciation to the Chairman and members of BHB’s Board of Directors for their unwavering support in developing the capital markets and their continuous oversight and guidance.
Bahrain Bourse’s achievements would not have been possible without the continuous dedication and steadfast commitment of the team, whom have played a significant role in ensuring operational resilience during turbulent times.
I would also like to extend my deepest gratitude to our stakeholders and market participants including brokers, listed companies, custodians, investors, and brokerage firms for their continuous support and active engagement in further advancing the market.
With the advent of 2022, Bahrain Bourse remains confident in its strategic plan and proven ability to continue delivering solid results in more volatile times. Bahrain Bourse is optimistic about the future opportunities as we look forward to bolster our global and regional partnerships, and broaden our products and services portfolio to provide an even better strategic fit for a diverse and growing investor base. With the continued support of all our stakeholders and especially the Central Bank of Bahrain, Bahrain Bourse is confident that it will realize its vision: A regional multi-asset class marketplace leader.
Khalifa bin Ebrahim Al-Khalifa
Chief Executive Officer