Bahrain’s Mubasher will target sub-Sahara’s markets frontier

Mubasher Financial Services, the Bahrain-based regional securities brokerage, is expanding to sub-Saharan Africa to give online traders access to difficult-to-reach frontier equity markets such as Kenya, Ghana and Nigeria.

The brokerage was also looking to give investors in those countries and South Africa the ability to trade shares of Middle East companies, said Salim Sebbata, a general manager at Mubasher.

Mubasher is aiming to roll out services in those countries this year, he said. Frontier markets are states where the size of stock exchanges are smaller than those of emerging markets and are often marked by greater political risks.

“We think what we’ve achieved in Mena we can replicate in frontier and emerging markets,” said Mr Sebbata. “We are actively looking at sub-Saharan Africa in terms of trading access, research and two-way flows. We know from these countries there is demand to tap the GCC.

“We are looking at partnerships to be able to execute in these markets but then roll out our technology with these brokers where there is a good population of active traders on the market.”

Global investors are increasingly looking for value in frontier markets such as those in the US dollar-pegged Arabian Gulf amid a rout in emerging markets with weak currencies and current accounts.

The MSCI Frontier Markets Index rose 21 per cent last year, outpacing the MSCI Emerging Markets Index by 26 percentage points, the widest annual gap since 2005, according to Bloomberg.

Frontier nations account for six of the seven biggest gains among global equity indexes, with the Dubai Financial Market General Index posting a 25 per cent return this year, the second best performer after the Cypriot benchmark. Abu Dhabi's main benchmark has gained 16 per cent so far this year, making it the fifth best performer.

The boom in UAE stock markets, which resulted in Dubai’s benchmark more than doubling last year, comes on the back of an economic renaissance in the Emirates following years of sluggish growth. Government spending on infrastructure, renewed business confidence, cheap financing and the inclusion of the UAE in the MSCI Emerging Market index have all aided the market recovery.

But some, such as US-based BlackRock, the world’s biggest asset manager, are beginning to ask if stock prices have outpaced the prospects for corporate profit growth and if a speculative bubble is forming.

“It’s not a hyper-expensive market but it’s not a super-cheap market,” said Mr Sebbata. “There’s still plenty of good economic news coming out of the UAE and that’s why we have been hiring aggressively over the past six months and plan to continue to do so.”

Mubasher said this week that it would open an office in Sharjah that would also serve the wider Northern Emirates region. Mubasher has existing offices in Dubai, Abu Dhabi and Al Ain, and it plans to continue beefing up its physical network in the country, Mr Sabbata said.

Regulated in Bahrain, Mubasher also has subsidiaries and group affiliates in Egypt, Saudi Arabia, Jordan and Libya, offering online trading and providing investment research.

Follow us on Twitter @Ind_Insights