Kuwait Investment Company: Profit-taking reduces stock market liquidity in the first eight months
A report by the Investment Research Unit at Kuwait Investment Company, covering the performance of Gulf stock markets in August and the first eight months of 2026, indicated an improvement in investor sentiment, coinciding with a de-escalation of regional geopolitical tensions during August 2026. This development had a positive impact on the performance of Gulf stock markets.
The Saudi market led the Gulf region in terms of monthly gains, with the Tadawul index rising by 5.07% during August.
The report noted that the Muscat Stock Exchange led Gulf markets in returns for the first eight months of 2026, posting strong gains of 29.61%, followed by the Saudi market.
Regarding the Kuwait Stock Exchange, the report pointed to a decline in circulating liquidity levels during the first eight months, due to profit-taking activities alongside investor caution regarding geopolitical developments and rising investment risks. Trading volume reached approximately 13.2 billion dinars, a 23% decrease compared to the same period in 2025.
In terms of market segmentation, liquidity was concentrated in the Main Market, which accounted for 65.6% of the total, equivalent to approximately 8.65 billion dinars. Meanwhile, the Main Market index declined by 2.2% during the period, compared to a modest 0.11% drop in the General Index, primarily driven by a 2% decline in the banking sector index, which comprises most of the listed banking stocks in the Main Market.
Despite the index decline, Main Market stocks remain the primary driver of the Kuwait Stock Exchange, with a market capitalization of approximately 44.35 billion dinars at the end of August, representing 82% of the total market capitalization.
In contrast, trading volume in the Growth Market fell by 39%, accounting for approximately 34.4% of the total exchange liquidity, equivalent to 4.53 billion dinars. This reflects a reduction in speculative activity on certain mid-cap and small-cap stocks. Conversely, the Growth Market index posted strong performance, gaining 11.2% during the period, indicating sustained selective investor interest in stocks with growth opportunities, despite lower liquidity and speculative levels.
The report also covered the total market capitalization of Gulf stock markets in August 2026, recording an increase of approximately $32 billion, reaching nearly $3.99 trillion by the end of the month. The increase was driven by higher market capitalization in the Saudi, Abu Dhabi, and Kuwait markets by approximately $24 billion, $6.5 billion, and $3 billion, respectively.
Year-to-date, the Saudi market continues to lead Gulf markets in terms of market capitalization growth, with gains of approximately $193.5 billion, raising its market value to nearly $2.54 trillion by the end of August. The net increase in total market capitalization across Gulf exchanges since the beginning of the year amounted to approximately $127 billion.
The report recorded a notable improvement in the value of Gulf stock trading during August, rising 22% month-on-month to reach approximately $51 billion, driven by the de-escalation of geopolitical tensions, the return of liquidity, and improved investor confidence.
The Saudi market accounted for approximately 59% of the total, at around $30 billion, up 31% from the previous month. Trading volumes in the Dubai and Abu Dhabi markets totaled approximately $9.8 billion, a 5% monthly increase, while Kuwait Stock Exchange liquidity rose 11% in August to reach approximately $5.8 billion. Total circulating liquidity in Gulf exchanges during the first eight months amounted to approximately $397 billion.
The report noted that the Kuwait Stock Exchange’s market capitalization stood at approximately 54.3 billion dinars at the end of August, up by around 930 million compared to the end of July. This enabled the exchange to fully erase losses recorded since the beginning of the year, registering a net increase of approximately 158 million compared to the end of 2025.
The monthly rise was attributed to a 79 million increase in the market capitalization of the banking sector, which helped reduce the sector’s year-to-date losses to around 596 million. Meanwhile, the market capitalization of the financial services sector rose by approximately 225 million, while the market capitalizations of both the telecommunications and real estate sectors each increased by around 85 million.
The report concluded that Gulf stock markets in August 2026 generally reflected a clear improvement in investor appetite. Future performance remains closely tied to the trajectory of oil prices, geopolitical developments, US interest rate trends, as well as the ability of Gulf companies to sustain earnings growth.
Regarding Kuwait, the report pointed out that despite continued liquidity levels remaining below those of the previous year, the market demonstrated a strong capacity to regain balance, supported by gains in the main market index and positive performance in certain sectors. However, leading stocks and banks continue to serve as the primary drivers of market capitalization and liquidity.
