The Bahrain Stock Exchange (BSE) had a quiet end to 2005. Investors were happy with their takings earlier in the year, as well as holding off in anticipation of a string of major initial public offerings (IPOs) in the new year.

‘The past two months have seen sideways movement on markets across the region,’ says Hisham al-Saie, head of corporate finance at Securities & Investment Company (SICO). ‘People were satisfied with their returns, especially fund managers, and therefore held back on investing.’ This was borne out by the start of the new year’s trading, which saw the market move sharply upwards.

After a dearth of many years, 2005 saw the return of IPOs to the market, with the flotations being launched of shares in Jawad Business Group– due to close on 8 January, Banadar Hotel Company and Nass Corporation. ‘Nass shares have not done particularly well since listing because of the mentality in the region that shares should quickly go up 10 or 20-fold on the secondary market,’ says Al-Saie. ‘But this is not going to happen in Bahrain, where trading is pretty thin anyway. So the small investors immediately sold their stakes to put the money in other regional IPOs.’

More liquidity is set to be sucked from the market over the coming months, with three major IPOs on the cards. Gulf International Bankis arranging the IPO planned as part of a capital raising exercise at Albaraka Banking Group, the parent group for nine Islamic banking subsidiaries of Saudi Arabia’s Dallah Albaraka Group, which is due to come to market during the first quarter. SICO is lead manager on the share offering for the local unit of Al-Salam Bank, a bank launched in 2005 in Sudan by a group of primarily GCC investors. Ithmaar Bank, a local subsidiary of Swiss-based Dar al-Maal al-Islami Group, is also planning an IPO in early 2006, managed by its sister company Shamil Bank.

Trading activity is expected to pick up once listed companies begin reporting their 2005 results. Banks are certain to post another year of rising profits and the sector has already been performing well. ‘The price of Bahrain Islamic Bank’sshares has almost doubled over the last few months as traders respond positively to restructuring,’ says Al-Saie. ‘ Ahli United Bankalways looks a good long-term investment because of its expansion strategy.’ The share price of Bank of Bahrain & Kuwait, which had been immobile for some time in the BD 0.50-0.60 ($1.30-1.60) range, has also begun to move up on intensified efforts by Commercial Bank of Kuwaitto take control.

Arab Insurance Group (Arig)also looks a good bet for 2006. The company has been putting in place the final pieces of a restructuring programme over the past year, most recently opening a branch in Singapore. However, traders are actingcautiously, waiting for the profit figures to bear out the new strategy’s success.