So far, Securities & Investment Company (Sico) has weathered the financial crisis well, especially considering how many brokerage firms have collapsed with the drop in activity in regional capital markets.
Considering that the many regional stock markets had only just started to recover from the crash of 2006 when the global financial crisis hit, it is a testament to Sico’s strength that it has survived.
The opening of the UAE office and a fixed income desk should give Sico two new ways to grow the business. Moving into bond trading could prove to have been a well-timed decision as activity picks up. There are also signs that regional investors are becoming more interested in trading their bond investments, rather than just holding them to maturity, which offers another opportunity.
Although its home market of Bahrain has faced about 18 months of political unrest, the company says it has been more affected by the global economic crisis than domestic political issues. Profit in the first half of 2012 rose significantly compared with 2011, but as with any business reliant on the health of the capital markets, the outlook is volatile.
A third round of quantative easing by Western governments has helped boost sentiment, but that will not provide the longer-term stimulus that regional capital markets need and a sustained recovery still seems to be some way off. This means Sico’s main avenue for growth will be to grab market share from the competition and move into new business areas.
Some steps have already been taken on this front, and over the next 12 months it will become clear how successful those measures have been.