KAMCO Invest: Kuwait Stock Exchange Gains Amid Economic Volatility

Kuwait Investment Company (KIC) stated that Kuwait Stock Exchange indices showed mixed performance during the first nine months of 2026. Gains were concentrated in the Main Market, while large-cap stocks remained under pressure. The First Market Index declined by 3.5% during this period, whereas the Main Market Index recorded gains of 9.5%. The Main 50 Index posted the strongest performance with a growth of 17.5%, while the weakness in First Market stocks dragged the overall market index down by 1.4% over the same period.

In a report for Al-Anbaa, KIC noted that this divergence is notable given the difficult regional conditions prevailing throughout the year. The performance of the Kuwait Stock Exchange indicated significant geopolitical pressures in the first half of 2026, which included a precautionary trading halt in early March, before the market witnessed a recovery during the second quarter of the same year.

The market continued to face a volatile investment environment during the third quarter of 2026. Regional equity markets faced renewed pressures in September due to geopolitical tensions, alongside rising global interest rates and bond yields. Nevertheless, Kuwait recorded a milder decline compared to many regional markets. The overall index fell by 1.3% on a monthly basis in September 2026, compared to a 3.7% drop in the S&P Composite Gulf Index.

Highlighting the relative resilience of the Kuwait Stock Exchange, KIC pointed to improvements in local economic indicators. The Purchasing Managers’ Index (PMI) for Kuwait’s non-oil private sector reached 52.4 points, a slight decrease from the 53.6 points recorded in August 2026, but representing significant growth compared to 50.8 points in July 2026, marking its highest level since February 2026. Additionally, local credit expanded by 5.1% on an annual basis in August 2026.

Regarding quarterly performance, the overall index declined during the first quarter of 2026 before recovering in the second quarter, while the third quarter was characterized by continued volatility. The market capitalization remained largely stable compared to the end of 2025. This relative stability was achieved despite sharp fluctuations in investor sentiment and regional markets during that period. Furthermore, the Central Bank of Kuwait maintained its discount rate at 3.50% in September 2026, a stance that differs from the policies of most central banks in Gulf countries. Kuwait’s move toward establishing a regulatory framework for sovereign sukuk also represented additional progress toward expanding the local capital market.

KIC clarified that sector performance during the first nine months of 2026 was mixed, reflecting disparities in the performance of general indices. The technology sector recorded the strongest gains, although this sharp rise was driven by the sole constituent stock within the index. The insurance sector also achieved strong gains, while the telecommunications and energy sectors ended the nine-month period with double-digit percentage increases. Conversely, the banking, real estate, consumer goods, and consumer services sectors experienced declines. The real estate sector’s performance remained largely stable compared to the end of 2025.

The underperformance of the banking sector had a particularly significant impact on the overall market, given its substantial weight in the First Market. During September 2026, sector performance declined further, with only the insurance and healthcare sectors recording monthly gains of 11% and 4.5%, respectively.

Trading Activity

Kuwait Capital Investment (KIPCO) noted that trading activity remained robust during the first nine months of 2026, despite a noticeable decline compared to the exceptionally strong levels recorded during the same period in 2025. Total trading value reached approximately 15.6 billion dinars, representing a 19% year-on-year decrease. Trading activity witnessed a significant recovery in September 2026, with monthly trading value rising by 37.7% month-on-month to reach approximately 2.45 billion dinars, compared to 1.78 billion dinars in August 2026.

The First Market continued to capture the largest share of market liquidity, accounting for 63.9% of total trading value during the first nine months of 2026, up from 56.7% during the same period in 2025. Meanwhile, the share of the Main Market declined to 36.1% from 43.3%.

KIPCO highlighted that, at the sector level, trading was concentrated in some of the largest and most active Kuwaiti sectors by trading volume. The banking sector accounted for 27.8% of total market liquidity during the first nine months of 2026, with trading value amounting to 4.34 billion dinars. The financial services sector held a 28.4% share, valued at 4.44 billion dinars, while the real estate sector accounted for 16.4%, valued at 2.56 billion dinars.

Within the banking sector, Kuwait Finance House was the most actively traded stock, with a value of 1.67 billion dinars, followed by National Bank of Kuwait at 1.11 billion dinars, and Gulf Bank at 359 million dinars.

KIPCO stated that this indicates that despite the stronger price performance recorded by the Main Market, trading value remained heavily concentrated in the First Market and in shares of large-cap companies.

Investor Composition

KIPCO noted that the investor composition continued to shift toward increased institutional participation during the aforementioned period. Institutions and companies accounted for 67.2% of the value of shares sold and 66.9% of the value of shares purchased during the first nine months of 2026, up from 61.3% and 62.9%, respectively, during the same period in 2025. Conversely, the share of individual investors declined.

Kuwaiti investors remained the most prominent group in the market, with net purchases reaching approximately 341 million dinars. Other foreign investors recorded net sales of approximately 291 million dinars, while investors from Gulf markets recorded net sales of approximately 50 million dinars. This indicates that market liquidity remained primarily supported by domestic sources, despite the gradual increase in institutional participation.

Nine Months of Consolidating Gains

In its report, KIPCO stated that the first nine months of 2026 represented a period of consolidating gains at the Kuwait Stock Exchange, following the strong performance recorded in 2025. Large-cap stocks faced pressure, leading to a decline in the First Market index; however, this decline was partially offset by stronger performance in the Main Market, particularly the Main 50 Index.

Relative Resilience Amid Volatility

Kuwait Capital (KAMCO) Investment stated in its report that the market demonstrated relative resilience during periods of escalating regional volatility, supported by an improvement in non-oil economic activity, credit growth, and relatively stable local interest rates. At the same time, the decline in trading volume compared to 2025, along with liquidity being heavily concentrated in a relatively small number of companies, indicates that investor activity remained selective and not broad-based.