A new $100m fund launched on the Bahrain Bourse on 15 June aimed of enhancing the market’s depth and boosting liquidity on the exchange.

The Bahrain Liquidity Fund aims to attract new investors and deepen Bahrain’s capital markets. It is expected to help local businesses raise capital and provide access to alternative courses of financing other than bank lending.

By improving liquidity, the fund also aims to address one of the primary concerns that has made investing in stocks listed on Bahrain Bourse less attractive. Restricted liquidity currently causes securities to trade at a discount to their underlying value and regional peers.

Bahrain Bourse has seen a number of initiatives in recent months, aimed at enhancing local capital markets. These include the introduction of the Bahrain Islamic Index – which is the GCC’s first Sharia-compliant index, the introduction of Real Estate Investment Trusts (REITs) rules and the offering of Bahraini government bonds and treasury bills.

“Capital markets have a very important role to play in funding the growth throughout Bahrain. They have the potential to enable businesses to grow faster and create more jobs and greater prosperity, but they will only be able to do this if they have enough liquidity,” said Sheikh Khalifa bin Ebrahim al-Khalifa, chief executive officer of Bahrain Bourse in a press statement. “The Bahrain Liquidity Fund is part of a series of reforms that will help to enhance and deepen Bahrain’s capital markets, helping the market to reach its potential and bringing benefits to businesses and investors.”

The Bahrain Liquidity Fund is supported by a number of market participants and has been vested with $100m of assets in cash and shares. The fund will act as a market maker, providing two way quotes on most of the listed stocks with a reasonable spread to allow the investors to actively trade their stocks.

The fund is supported by a number of market participants and has been vested with $100m of assets in cash and shares. The fund will act as a market maker, providing two way quotes on most of the listed stocks with a reasonable spread to allow the investors to actively trade their stocks.

To ensure high governance standards, the fund’s activities and performance will be evaluated and monitored on timely basis by a supervisory board representing the seed investors.

“As the first approved market maker on the Bahrain Bourse, we are delighted to announce the launch of Bahrain Liquidity Fund. This has been collaboration between Sico and a number of prominent market participants, with the support of the Central Bank of Bahrain and Bahrain Bourse,” says Najla al-Shirawi, Chief Executive Officer of Securities & Investment Company (SICO). “More liquid capital markets can provide real benefits to the economy. They are the heart of any economy through which savings are deployed into long-term investments. A well developed and vibrant capital market will contribute immensely to higher economic growth and more diverse economy.”