Kuwait Investment Company: $89 billion in Gulf stock market gains

Over seven months... July witnessed a relative easing of tensions, which contributed to improved investor sentiment.

The Investment Research Unit at Kuwait Investment Company confirmed that July saw a relative decline in geopolitical tensions compared to previous periods, contributing to improved investor sentiment, despite regional risks remaining a factor influencing liquidity flows and market trends. Gulf stock markets exhibited mixed performance, with the financial results of listed companies being the primary driver of Gulf exchanges, particularly in the banking, telecommunications, and energy sectors.

He stated that the total market capitalization of Gulf stock markets rose by approximately $2 billion during July 2026, reaching about $3.96 trillion at the end of the month, following a decline of approximately $6 billion in the market capitalization of both the Dubai Financial Market and the Qatar Stock Exchange. Meanwhile, the Saudi stock market, the largest by market capitalization, rose by only about $4.5 billion, recording a market value of $2.52 trillion. The second-highest gains were recorded by the Abu Dhabi market, which approached $3 billion, and the Kuwait Stock Exchange, which gained $1.2 billion during the month, bringing its market capitalization to $173.4 billion. Since the beginning of the year, the Saudi stock market remains the top performer in terms of market capitalization gains, with approximately $169 billion, while the Abu Dhabi market recorded the highest losses at $67 billion, and the Qatar Stock Exchange and Dubai Financial Market recorded losses of $14 billion and $9 billion, respectively. Consequently, total gains in market capitalization for Gulf exchanges since the beginning of the year amounted to $89 billion.

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Trading volumes in Gulf stock markets declined by 23% in July to $41.5 billion, due to the return of geopolitical tensions and uncertainty in the economic and investment landscape. The Saudi stock market accounted for 55% of the total trading value of Gulf stock markets in July, with liquidity valued at $23 billion, down 21% from the previous month’s trading.

The report issued by the unit added that the banking sector in Saudi Arabia recorded an 8% growth in net profits for the first half of the year, reaching SAR 48.82 billion. Banks in Abu Dhabi also recorded growth in their aggregate net profits for the first half, at 12%, reaching AED 25.2 billion, while net profits of banks in the Dubai Financial Market grew by 4% to reach AED 22.31 billion.

It noted that stable oil prices above support levels bolstered expectations for government spending, corporate profitability, and investor confidence. Additionally, investors were anticipating the Federal Reserve’s stance on interest rates, as declining expectations of monetary tightening supported risk appetite in Gulf markets. Foreign investor inflows into leading stocks, banks, and companies with stable profits continued, a trend particularly evident in Saudi Arabia and the UAE. With the start of the first-half earnings season, liquidity increased, and investors moved to rebuild positions in companies whose results exceeded expectations.

He clarified that the Muscat Stock Exchange led Gulf markets by a wide margin in terms of returns, with gains of 24%, supported by strong corporate financial results, rising investor confidence in market reforms, and expectations of its upgrade. Meanwhile, the Saudi stock market was the only other Gulf market to end the first seven months of the year with moderate gains of 0.9%, benefiting from strong financial results from banks and energy and telecommunications companies.

In contrast, the Qatar Stock Exchange came under pressure due to declining gas supplies, ongoing uncertainty regarding global interest rate trends, rising geopolitical risks, and recorded the sharpest declines among major Gulf markets, falling by 7.8%. It was followed by the Dubai Financial Market, whose index lost 4.2%, and the Kuwait Stock Exchange, where the general market index fell by 1.69%.

Kuwait Stock Exchange liquidity drops 24% in seven months

The report stated that the first seven months of the current year witnessed a decline in circulating liquidity at the Kuwait Stock Exchange due to some profit-taking operations. It warned investors about geopolitical developments and rising investment risks, noting that trading volume reached approximately 11.4 billion dinars, down 24% compared to the same period in 2025. Sector-wise, 30.7% of total stock exchange liquidity flowed to the banking sector, equivalent to 3.5 billion dinars, while liquidity for financial services companies and real estate companies reached 3.1 billion dinars and 1.9 billion dinars, accounting for 27% and 16.6% of trading value, respectively.

According to market classification, circulating liquidity during the first seven months was concentrated in First Market shares, accounting for 66.6% of the Kuwait Stock Exchange’s total liquidity, reaching 7.6 billion dinars. The First Market index declined by 2.98% in the first seven months of the year, compared to a 1.69% drop in the general market index, due to losses recorded by the banking sector index, which fell by 2.1%, as the First Market index includes most listed bank shares. First Market shares remain the main pillar of the Kuwait Stock Exchange, with a market capitalization of nearly 44 billion dinars at the end of the month, equivalent to 83% of the Kuwait Stock Exchange’s total market value.

The report noted that trading on the Main Market fell by 42% during the first seven months, accounting for 33.4% of liquidity, equivalent to 3.81 billion dinars. This decline served as an indicator of reduced speculation on some medium and small-cap stocks in terms of market value. This decrease in speculative intensity and liquidity coincided with solid gains in the Main Market index, which rose by 5.2% in the first seven months of 2026.

Five factors behind Gulf market volatility

The report stated that the first seven months of 2026 were among the most volatile periods for Gulf stock markets since the coronavirus pandemic, due to the convergence of several factors:

1. Military escalation and the accompanying disruptions in navigation during the first quarter.

2. Oil prices rising to record levels before declining as supplies improved.

3. Ongoing uncertainty regarding US monetary policy.

4. Fluctuations in global investors’ appetite for emerging markets.

5. The commencement of first-half corporate earnings announcements.

The report added that despite these challenges, Gulf markets have demonstrated resilience, supported by the robustness of the banking sector, increased government spending, and improved profits for a large number of leading companies.