"The Center": Kuwaiti stocks outperform regionally, supported by banking sector profits
- Kuwaiti indicators
- 0.6 percent rise in the general market index
- 1.5 percent rise in the First Market index
- 3.1 percent gains for banking sector shares
- Gulf indicators
- 1.5 percent decline in the Gulf Standard & Poor’s index
- 1.1 percent rise in Abu Dhabi market shares in July
- 15 percent acceleration in the growth of the UAE credit market in May
- 12.5 percent US tariffs on imports from the Gulf
Kuwait Financial Centre (Markaz) reported in its monthly market performance report for July 2026 that Kuwaiti markets had surpassed the three-month decline, posting a marginal rise supported by strong corporate earnings results, despite declines in most Gulf markets during the month. The general market index rose by 0.6 percent, driven by gains in the First Market index, which increased by 1.5 percent. Banking sector shares led market performance during the month, recording gains of 3.1 percent, supported by strong profits reported by the sector.
The “Markaz” report noted that shares of National Bank of Kuwait and Kuwait Finance House rose by 6.5 percent and 2.3 percent, respectively, following the announcement of positive results for the first half of 2026. Net profits for “National Bank” increased by 3 percent year-on-year, while “Kuwait Finance House” profits rose by 6.1 percent, despite geopolitical challenges and economic pressures.
Among First Market shares, Toli General Trading Company’s stock rose by 7.5 percent during the month, following the company’s announcement of positive results for the second quarter of the year, supported by revenue growth resulting from increased store productivity, expansion of the branch network, and strong consumer demand.
The report also covered the approval by Blackstone, KKR, and Brookfield to acquire a 49 percent stake in a joint venture with Kuwait Petroleum Corporation (KPC), in a deal representing the largest foreign investment in Kuwait’s history. The transaction is valued at $16 billion and is expected to support KPC’s capital expenditure plans and assist its goal of raising crude oil production capacity to 4 million barrels per day by 2035.
On the monetary policy front, the report indicated that the Central Bank of Kuwait kept the main discount rate unchanged at 3.5 percent in July, following the US Federal Reserve’s decision to hold interest rates steady.
Conversely, real GDP contracted by 4.6 percent year-on-year during the first quarter, affected by a 12.5 percent decline in oil GDP, amid disruptions to production and exports. Final accounts of Kuwait’s public finances for the fiscal year 2025–2026 showed the budget deficit widening to 7.1 billion dinars, equivalent to approximately 15 percent of GDP, compared to a deficit of 1.1 billion dinars in the previous year. The deficit reached its highest level since the fiscal year 2020–2021, which was affected by the repercussions of the COVID-19 pandemic, and also exceeded government budget estimates by approximately 800 million dinars.
In another development, Kuwait issued sovereign bonds worth $6 billion, distributed across three tranches, marking its first issuance since October 2025. Subscription orders exceeded the issuance value by more than three times, reflecting continued investor confidence despite geopolitical developments in the region.
The report recorded a negative performance for Gulf markets overall in July, with the S&P Composite Gulf Index declining by 1.5 percent, weighed down by geopolitical tensions in the Middle East, including attacks targeting key infrastructure facilities in Kuwait and Bahrain, which prompted investors to exercise caution in their trading.
Conversely, a strong start to the corporate earnings season helped cushion market losses. The Saudi Tadawul Index fell 1.9 percent, dragged down by the poor performance of several leading stocks.
The report highlighted developments in the UAE markets, where the Dubai Index dropped 2.7 percent amid geopolitical escalation that triggered a broad wave of selling in real estate sector shares, fueled by concerns over weakening foreign demand.
In contrast, Abu Dhabi market shares ended July trading up by 1.1 percent, supported by strong banking sector earnings.
In a related development, the United States imposed a 12.5 percent tariff on imports from Gulf Cooperation Council (GCC) economies.
The report also noted that Fitch Ratings reaffirmed Saudi Arabia’s sovereign credit rating at ‘A+’ with a stable outlook. In the UAE, local credit market growth accelerated to 15 percent year-on-year in May, marking its fastest pace in over a decade, driven by a 10.1 percent increase in corporate lending and a 13.3 percent rise in consumer credit.
In its conclusion, Al Markazi predicted that economic data and technology stocks would determine market trajectories in August. Investors are awaiting the release of economic data during the month to assess the potential path of interest rates, following the US Federal Reserve’s retreat from providing clear forward guidance. Meanwhile, renewed geopolitical risks continue to pressure regional equity markets and global commodity markets. Global market performance is likely to be significantly influenced by investor sentiment toward technology and semiconductor stocks. Furthermore, the direction of Gulf markets is expected to hinge on oil price movements, geopolitical developments in the region, and corporate earnings announcements.
