Kuwait Investment Company: Mixed Performance of Gulf Markets in September

Gulf stock markets exhibited mixed 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 over 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.

According to a report by Kuwait Investment Company, 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 Stock Exchange’s First Market Index dropped by approximately 1.30%, and the General Market Index by about 1.33%, while the Muscat Securities Market recorded a modest decline of around 0.49%. Consequently, the S&P GCC Index fell by approximately 3.4% in September, amid reduced risk appetite and higher financing costs.

Liquidity also saw notable improvements in some markets during September. Trading value in the Kuwait Stock Exchange rose by approximately 37.8%, in Dubai by 18.4%, and in Abu Dhabi by 11.5%. In contrast, trading value declined in Saudi Arabia, Qatar, and Oman by approximately 29.6%, 18%, and 6.4%, respectively. The Saudi market accounted for about 47% of total Gulf liquidity, followed by the Kuwait Stock Exchange at approximately 18%, the Abu Dhabi Securities Exchange at 16%, and the Dubai Financial Market at 9%.

Regarding the performance of Gulf stock markets in the first nine months of 2026, the period was the most volatile in recent years due to several factors:

• Military escalation in the region and the resulting disruptions in navigation through the Strait of Hormuz.

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

The Kuwait Stock Exchange experienced a decline in circulating liquidity levels during the first nine months of 2026, amid profit-taking, investor caution regarding geopolitical developments, and rising investment risk levels. Total trading value reached approximately 15.6 billion Kuwaiti Dinars (KWD), a decrease of 19% compared to the same period in 2025. By sector, the banking sector accounted for 27.8% of total market liquidity, equivalent to approximately 4.34 billion KWD, with the majority concentrated in shares of Kuwait Finance House, National Bank of Kuwait, and Gulf Bank, with trading values of approximately 1.67 billion KWD, 1.11 billion KWD, and 359 million KWD, respectively. Conversely, the financial services sector and real estate companies recorded trading values of 4.44 billion KWD and 2.56 billion KWD, respectively, accounting for 28.4% and 16.4% of the total trading value in the exchange.

According to market classification, shares in the First Market continued to dominate the largest share of trading liquidity, accounting for approximately 63% of the total liquidity of the Kuwait Stock Exchange, equivalent to 9.9 billion Kuwaiti dinars during the first nine months of the year. In contrast, the First Market Index declined by 3.48% during the period, compared to a 1.44% drop in the General Market Index, primarily driven by the performance of the banking sector, whose index fell by approximately 2.7%, given the significant weight of bank stocks within the First Market’s composition. Despite the index’s decline, First Market companies remain the main driver of the Kuwait Stock Exchange, with their market capitalization reaching approximately 43.8 billion Kuwaiti dinars by the end of September 2026, representing about 82% of the exchange’s total market capitalization.

As for the Main Market, it witnessed a greater decline in activity levels, with trading value dropping by approximately 32% during the first nine months of 2026 to reach 5.7 billion Kuwaiti dinars, accounting for 37% of the market’s total liquidity.