Al-Shal: Harsh Impacts on Failed States Due to Mismatch Between Debt Costs and Returns
- Global public and private debt reached $365.5 trillion at the end of the first half of the year
- New debt amounted to $10 trillion, representing a quarter of US sovereign debt
- Emerging economies accounted for $110.6 trillion, or 30 percent of global debt
A report by the Economic Research Unit at Al-Shal Consulting stated that, according to the Institute of International Finance’s September 23, 2026 report on global sovereign and private debt, the state of private debt does not appear better than that of sovereign debt, which had been warned about by IMF Managing Director Kristalina Georgieva. Global public and private debt stood at $365.5 trillion at the end of the first half of this year, marking a new all-time high and continuing to rise at unprecedented rates. New debt in the first half of 2026 exceeded $10 trillion, or roughly a quarter of the value of US sovereign debt.
Al-Shal noted that emerging economies accounted for approximately 65 percent of the increase in the first half of 2026, or about $6.5 trillion, bringing their total to around $110.6 trillion, or roughly 30 percent of total global debt. At this level, the global debt-to-GDP ratio stands at approximately 310 percent. The Institute noted that this figure appears slightly lower than its value at the beginning of 2021, post-pandemic; however, this comparison is misleading, as the high nominal growth of global GDP due to elevated inflation rates does not reflect a genuine decrease in the relative debt burden.
The report observed that China’s public debt rose at the end of the first six months of this year to 103 percent of its GDP, up from around 95 percent at the end of mid-last year.
India, the largest partner in the BRICS bloc, had a debt-to-GDP ratio of approximately 77.5 percent, remaining stable over the year. Brazil’s debt-to-GDP ratio reached around 97 percent, up from approximately 89.5 percent at the end of the first half of 2025. Adding the $40.1 trillion in US public debt and China’s non-financial corporate debt, which amounted to 144.6 percent of its GDP, highlights the rapid pace at which the world’s public and private sectors are moving toward a debt trap.
The report considered that the significant expansion in borrowing, led by the world’s two largest economies, the United States and China, combined with competitive expansion from the private sector—particularly by major artificial intelligence companies—amidst an economic environment experiencing high inflationary pressures, has forced the US Federal Reserve to raise interest rates after a three-year pause. This phenomenon sets the stage for heightened risks. Unless borrowed funds yield returns exceeding their high and potentially rising costs, the repercussions will be severe for countries that fail to align debt costs with returns, across both public and private sectors.
Regarding the stock market, the corporate and institutional sector remains the largest participant, with its share increasing. It accounted for 67.2 percent of the total value of shares sold (61.3 percent for the same period in 2025) and 66.9 percent of the total value of shares purchased (62.9 percent for the same period in 2025). This sector sold shares worth 10.678 billion dinars, while purchasing shares worth 10.627 billion dinars, resulting in a net trading position favoring sales by approximately 51.386 million.
The second largest contributor to market liquidity was the individual sector, whose share declined. Individuals accounted for 30.1 percent of the total value of shares purchased (35.3 percent for the same period in 2025) and 29.7 percent of the total value of shares sold (36.9 percent for the same period in 2025). Individual investors bought shares worth 4.784 billion and sold shares worth 4.720 billion, resulting in a net buying position of approximately 64.243 million.
Al-Shaal noted that a characteristic of the Kuwait Stock Exchange is its continued local nature. Kuwaiti investors were the largest traders, having purchased shares worth 13.31 billion, accounting for 83.8 percent of the total value of shares purchased (84.7 percent for the same period in 2025). They sold shares worth 12.969 billion, accounting for 81.6 percent of the total value of shares sold (87.4 percent for the same period in 2025), resulting in a net buying position of approximately 340.999 million.
The share of other investors in the total value of shares sold amounted to approximately 2.674 billion dinars, or 16.8 percent (10.8 percent for the same period in 2025), while the value of their purchased shares amounted to approximately 2.383 billion, or 15 percent (13.7 percent for the same period in 2025), resulting in a net selling position of approximately 291.461 million.
The share of investors from Gulf countries in the total value of shares sold was approximately 1.5 percent (1.9 percent for the same period in 2025), valued at 241.353 million, while the value of their purchased shares was approximately 191.814 million, or about 1.2 percent (1.6 percent for the same period in 2025), resulting in a net selling position of approximately 49.538 million.
The relative distribution among nationalities changed compared to the previous period, with Kuwaitis accounting for approximately 82.7 percent, traders of other nationalities 15.9 percent, and traders from Gulf countries 1.4 percent, compared to approximately 86 percent for Kuwaitis, 12.3 percent for traders of other nationalities, and 1.7 percent for traders from Gulf countries in the same period of the previous year.
The number of active trading accounts at the end of September 2026 reached approximately 57,472 accounts, representing 12.1 percent of the total accounts, compared to approximately 55,569 accounts at the end of August 2026, representing 11.7 percent of the total accounts for that month, an increase of 3.4 percent.
The significant divergence in exchange liquidity between its two markets and among companies within each market may have contributed to the trend of liquidity in the first nine months, with 63.9 percent flowing to the first market. This increased its concentration share after it had accounted for approximately 56.4 percent of the total for all of 2025. Half of its companies captured approximately 75.6 percent of its liquidity, leaving approximately 24.4 percent for the other half. Overall, half of the companies in both markets (the First and Main markets) accounted for approximately 91.9 percent of the exchange's liquidity, while the other half accounted for only 8.1 percent. Consequently, the excess liquidity of some small companies had a dominant effect on the positive gap between their prices and book values, while the scarcity of liquidity for some other companies kept the gap, albeit slightly narrowed, in favor of their prices being below their book values.
