"KAMCO": Geopolitical developments have affected market conditions

Foreign investors, including institutions and individuals, recorded net sales in Gulf stock markets during the second quarter of 2026, amounting to $298.3 million, following net purchases of $1.5 billion in the first quarter of the same year.

A report by KAMCO Investments stated that, for the first half of 2026, foreign investors recorded net buying activity in four out of six months, despite intermittent selling pressure.

According to the report’s details, total net purchases reached $1.2 billion in the first half of 2026, compared to $6.9 billion in the first half of 2025, reflecting an 83.1 percent year-on-year decline.

Key factors influencing foreign investment flows in the region included regional geopolitical conflicts, disruptions surrounding the Strait of Hormuz that impacted oil price movements, global interest rate trends, and seasonal factors such as the Eid holiday, which led to reduced market activity and trading volumes.

Quarterly data on trading activities in Gulf exchanges showed that all markets recorded net selling by foreign investors during the second quarter of 2026, except for Saudi Arabia, which saw net purchases by foreign investors worth $1.6 billion during this quarter, partially offsetting the overall net sales.

Foreign investors remained the largest sellers in the Dubai Financial Market during the second quarter of 2026, recording net sales of $641.5 million, following net sales of $654.0 million in the previous quarter. Kuwait came next with net foreign investor sales of $480.3 million, while the Qatar Stock Exchange and Abu Dhabi Securities Exchange recorded net sales of $375.4 million and $187.3 million, respectively. The Muscat Securities Market and the Bahrain Bourse experienced relatively lower net selling, at $161.3 million and $3.1 million, respectively.

On the other hand, monthly trading trends (excluding Bahrain due to data unavailability) showed that Saudi Arabia continued to record net purchases by foreign investors throughout the three months of the second quarter of 2026. In contrast, the Dubai, Abu Dhabi, Qatar, Kuwait, and Oman markets experienced continuous net selling by foreign investors in each of the three months of this quarter.

The report stated that the performance of Gulf stock markets on a quarterly basis was mixed during the second quarter of 2026, reflecting the impact of geopolitical developments on market conditions, investor sentiment, corporate earnings, and sectoral trends across the region. As a result, local investors turned into net sellers during this quarter, while foreign investors absorbed these shares, leading to substantial net purchases by them. On a monthly basis, net purchases by local investors peaked in May 2026, recording total net inflows of $1.3 billion. This was followed by a reversal in trend during April and June 2026, which together recorded net sales worth $2.2 billion.

Activities by Gulf investors (excluding Bahrain due to lack of data) in Gulf markets revealed a shift to net buying during the second quarter of 2026, with Gulf investors recording net purchases of $62.4 million, compared to net sales of $269.0 million in the first quarter of 2026, indicating a turnaround in investor sentiment relative to the previous quarter. Saudi Arabia recorded the highest net buying by Gulf investors during this quarter, valued at SAR 220.7 million, followed by Oman at approximately SAR 127.2 million. Conversely, the stock exchanges in Dubai, Qatar, Abu Dhabi, and Kuwait experienced net selling by Gulf investors during the second quarter of 2026, partially offsetting the strength of buying activities recorded by Gulf investors during the same period.

In the Saudi stock market, local Saudi investors remained net sellers during the second quarter of 2026, recording net sales of SAR 5.8 billion, compared to net sales of SAR 9.6 billion in the first quarter of 2026. Saudi individual investors were net sellers during the second quarter of 2026, with their net sales reaching SAR 9.0 billion. In contrast, Saudi institutional investors were net buyers, recording net purchases of SAR 3.2 billion. Meanwhile, trading by foreign investors from outside Gulf countries and Gulf investors recorded net purchases of SAR 4.6 billion and SAR 1.2 billion, respectively.

During the first half of 2026, foreign investors were net buyers in the Saudi market, with total net purchases amounting to SAR 12.7 billion, representing a 75.4 percent increase compared to net purchases of SAR 7.3 billion in the first half of 2025, supported by the expansion of market access for foreign investors. Investor sentiment also received additional support from the Capital Market Authority’s decision to open the Saudi stock market to all foreign investors starting February 1, 2026, which helped broaden market participation. Although foreign investors turned into net sellers in March and May 2026, primarily due to escalating geopolitical tensions in the region, the market returned to net buying in subsequent months during the first half of 2026.

Foreign investors’ purchases peaked in January 2026, totaling SAR 5.0 billion. During the first half of 2026, the highest weekly net buying by foreign investors was recorded in the third week of April 2026, valued at SAR 2.3 billion, while the highest weekly net selling of SAR 1.1 billion was recorded in the first week of May 2026. At the same time, Saudi individual investors recorded net sales of SAR 22.3 billion during the first half of 2026, compared to net purchases of SAR 7.1 billion in the corresponding period of the previous year. Retail investors also recorded their highest net purchases in March 2026, reaching SAR 7.3 billion.

Regarding overall trading activities, the total volume of shares traded in Gulf markets decreased by 21.7 percent on a quarterly basis, reaching 64 billion shares in the second quarter of 2026, compared to 81.7 billion shares in the first quarter of 2026.