Bahrain Stock Exchange Securities & Investment Research

This week was one of the best this year for the BSE as the index rose 1.5%. The BSE moved at a much faster pace than last week with the total volume and value of trades increasing over 55%. The advance decline ratio was 16 to 3. Elsewhere in the Gulf all the major indices rose: Saudi (2.1%), UAE (0.7%). KSE (0.6%), and MSM (0.6%). The International Finance Corporation (IFC) has reported that they are adding Bahrain and Oman to its IFC Global Index series. The IFCG Bahrain Index will comprise the 15 most active stocks listed on BSE. After a disastrous year in 1998 and a recovery in profits in 1Q99, Arig profits slumped 45% in the 1H99 to $4.5m compared to the same period last year. This was mostly attributed to the group's reinsurance business that reported a loss of $1.8m in 1H99 compared to a net profit of $16.7m a year earlier. The group's gross premiums fell by 1.8% to $195.9m in 1H99 compared to 1H98. While the gross premium levels of reinsurance operations were almost constant at $137.1m, the gross premium contribution of non-reinsurance operations fell by 5% to $58.8m. Total investment also dropped to $29.3m from $45.1m. Arig was the top loser for the week, falling 2.8%. Unlike the two other hotel companies, Bahrain Hotels Co. (BHC) reported an increase of 9.4% in gross revenues for 1H99. But at the same time their operating costs rose by 11.6% reducing the operating margin to 28% versus 29.5% for 1H98. Consequently the growth in net profits was 4.5% only. Bahrain Islamic Bank, which runs according to the Islamic Calendar announced their first quarter results. Their net profits declined 6.6% as compared to the same period last year. Bahrain International Bank (BIB) posted a net profit of $7.3m during 1H99 down 34% compared to 1H98. This fall was mainly the result of a 43.5% drop in investment income which stood at $6.3m for 1H99. Some of this decline was nullified by a 122% increase in net interest income to $6.5m and therefore operating profits fell by 19.3% only. According to a bank statement, this drop in profits was in-line with the management expectations as last year benefited from an extraordinary gain on investment. The Net Asset Value of SICO Selected Securities Fund as of 2 September was 101.3 fils (1.3% increase from last week).