Markets

Bahrain bourse launches incentive scheme to revive trading

January 8, 2025, 1:24 PM

Bahrain Bourse hopes traders will be encouraged by discounts on commissions

Bahrain bourse hit 14-week low
Discounts on commissions planned
Aims to encourage trading

Bahrain Bourse will introduce various incentives next month to try to boost trading on a market that accounts for less than one-thousandth of daily turnover on Gulf stock exchanges.

The scheme, which begins on February 2, aims to improve trading activity and increase the number of institutions investing in Bahraini stocks. Its launch comes amid a prolonged decline on the country’s share index, which fell 0.1 percent to a 14-week low of 1,977 points on Tuesday.

Entities that reach certain trading thresholds will receive up to 30 percent discounts on trading commissions, although rebates cannot exceed more than BHD20,000 ($53,191) per year.

Liquidity providers, which provide buy and sell prices on stocks and are typically banks and other financial institutions, will also qualify for commission rebates.

“By incentivising greater market engagement, Bahrain Bourse aims to deepen market liquidity, encourage active trading, and bolster the overall capital market ecosystem,” Abdulla Mohamed Janahi, senior director of trading operations at Bahrain Bourse, said in a statement announcing the programme’s launch.

The bourse’s efforts reflect policymaker worries over the lack of bourse trading. On Tuesday, 1.6 million shares worth a combined $1 million changed hands on the Bahrain exchange.

Of this turnover, trading in Al Salam Bank represented 56 percent, according to AGBI calculations. Aluminium Bahrain (19 percent) and Beyon (9 percent) – formerly known as Bahrain Telecommunications (Batelco) – were the next most-active stocks. In all, 30 of the 40 listed stocks did not register a single trade on Tuesday.

In contrast, Saudi Arabia’s bourse turnover on Tuesday was $1.7 billion, while Abu Dhabi ($361 million), Dubai ($221 million) and Kuwait ($206 million) all recorded sizeable trading.

Bahrain accounted for just 0.04 percent of turnover on the seven stock markets in the GCC on Tuesday. Saudi Arabia (66 percent), Abu Dhabi (14 percent), Dubai and Kuwait (both 8 percent) were the most active in terms of traded value.

Bahrain’s bourse is also the region’s smallest in terms of the market capitalisation of domestic company listings. Manama listings total $20.4 billion, although it has two dual listings: Islamic lender Kuwait Finance House and Oman’s Bank Muscat.

This duo has a combined market capitalisation of $48.6 billion. On Tuesday, just 1,000 shares in Kuwait Finance House were sold, while Bank Muscat was not traded on Bahrain’s bourse.