Capital Markets

With new regulations, the continued implementation of development strategies and the historic opening of the nation’s second exchange holding the interest of market participants, Bahrain’s capital markets have been receiving significant attention from investors. However, a number of challenges have presented themselves. The European debt crisis, local and regional unrest, and the lingering effects of the global economic slowdown have combined to create a difficult environment for exchanges across the Gulf. The market capitalisation of the Bahrain Bourse (BHB) peaked in 2007 at $10.19bn but has since lost value due to political and economic difficulties, ending 2011 at $6.25bn. However, the sector is widely expected to enter a period of expansion, with new products and innovations planned for both of Bahrain’s exchanges in the coming year. These include the introduction of a delivery-versus-payment (DvP) system, whereby delivery of securities is carried out simultaneously with payment. Further regulatory reforms in the pipeline are aimed at creating a more attractive investment environment. This chapter includes an interview with Fouad Rashid, Director, Bahrain Bourse.