'Kuwait Investment': Gulf markets show resilience in the face of geopolitical risks

A report issued by the Investment Research Unit of Kuwait Investment Company stated that Gulf stock markets experienced divergent performance in September 2026, with most markets facing selling pressure due to escalating regional geopolitical risks, ongoing tensions related to the war in the region, concerns about navigation and energy supplies through the Strait of Hormuz, rising oil prices, and growing expectations that interest rates would remain at elevated levels for longer. Conversely, strong financial results from listed companies, particularly in the banking and energy sectors, provided relative support to the markets and helped mitigate the severity of declines.

The Dubai Financial Market led Gulf markets in terms of gains during the month, rising by 2.13%, followed by the Abu Dhabi Securities Exchange with gains of approximately 0.63%. Most other markets declined, with the Saudi Tadawul Index falling by about 6.17%, the Qatar Stock Exchange by 5.73%, and the Bahrain Bourse by 1.46%. The Kuwait Bourse’s First Market Index dropped by approximately 1.30%, and the General Index fell by about 1.33%, while the Muscat Securities Market recorded a modest decline of around 0.49%. Consequently, the S&P GCC Index decreased by approximately 3.4% in September, amid reduced risk appetite and higher financing costs.

Regarding the performance of Gulf stock markets in the first nine months of 2026, it was the most volatile period in recent years, driven by several factors: military escalation in the region and associated disruptions to navigation through the Strait of Hormuz, oil prices reaching record highs before declining as supplies improved, and continued uncertainty regarding US monetary policy and interest rate trends.

Despite these challenges, Gulf markets demonstrated considerable resilience in the face of geopolitical risks, supported by the strength of the financial sector, sustained government spending at healthy levels, improved net profits for a large number of leading companies, and continued liquidity inflows to the markets, despite a decline from 2025 levels due to foreign investment factors in Gulf stock exchanges.