The Bahrain Bourse (BHB) started the year on a subdued note, recording the second-largest decline in the GCC for January 2026, as investors weighed a historic fiscal reform package against positive GDP growth figures.
The Bahrain All Share Index fell by 1.1 per cent to close the month at 2,044.1 points. Despite four out of seven sectors showing gains, the market was dragged down by its “heavyweights” in the financial and industrial sectors.
The market’s performance was largely dictated by the financial index, which shed 1.5pc, and the materials index, which dropped 1.8pc.
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Within the materials sector, Alba saw a 1.8pc share price decline as the sector’s sole constituent.
The banking and finance sector also faced pressure, with major laggards including GFH Financial Group, which plummeted 7.7pc, and Bank ABC, which closed down 6.5pc.
On the brighter side, BMMI led the gainers with a 5.7pc jump, followed by Bahrain Commercial Facilities and Al Salam Bank, which rose 3.1pc and 2.7pc respectively.
Market liquidity saw a significant cooling period in January as the total volume of shares traded crashed by 60.5pc to 55.1 million shares, compared to 101.7m in December.
Similarly, the total value of traded shares fell to BD5.5m, marking a 26.3pc drop from the previous month.
GFH Financial Group remained the most active stock, leading both volume and value charts with 22.5m shares changing hands at a value of BD13.4m.
The market performance comes as the kingdom introduces its most extensive financial and tax reform package to date.
In a bold move to address a $50 billion public debt, which currently sits at 109pc of GDP, the government has deregulated fuel prices to link them to international market rates for the first time.
The reform package also includes hiked utility tariffs, though subsidies remain for citizens’ primary residences within set consumption limits.
Furthermore, the kingdom is drafting legislation for a 10pc Corporate Tax for local companies with profits exceeding BD200,000, which is scheduled to take effect in January 2027.
Despite the fiscal tightening, the latest data shows the economy remains on a growth path as real GDP expanded by 4pc in Q3-2025.
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The non-oil sector grew by 3.1pcand now makes up 85pc of the total economy, with the strongest performance seen in real estate at 5.4pc, finance at 5pc, and manufacturing at 3.9pc.
The oil sector also witnessed a sharp 9.3pc jump during the same period.
Foreign investor confidence appeared stable as the kingdom’s inward foreign direct investment (FDI) stock rose 5.8pc year-on-year to reach BD17.5bn.
Zooming out, GCC equity markets outperformed most global peers in January, buoyed by a robust start to the fourth-quarter earnings season and a recovery in oil prices.
The MSCI GCC Index surged 7.8pc during the month, marking its strongest monthly performance since April 2020.
The index closed at 791.8 points, its highest level in nearly three and a half years, despite volatility elsewhere and ongoing regional geopolitical tensions.
Saudi Arabia anchored the regional rally with an 8.5pc gain, its best monthly performance in five years.
Oman and Dubai followed closely, advancing 7.9pc and 6.4pc, respectively.
Conversely, Boursa Kuwait saw the region’s steepest decline, falling 3.8pc as investors locked in profits.
Positive sentiment was underpinned by strong year-on-year profit growth from major regional banks and a rebound in crude oil, which traded above $70 per barrel for the first time in four months.
avinash@gdnmedia.bh
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