Will GCC Markets Lead in 2026?

Looking ahead, positive projections for a healthy IPO pipeline across the Gulf over the next 12-18 months appear. This optimism is buoyed by relieving geopolitical tensions, which have actually previously affected market self-confidence. Even normally quieter markets are showing signs of activity, exhibited by Kuwait's anticipation of an unusual convenience-store IPO.

Overall, as regional markets continue to develop, they show the more comprehensive economic and geopolitical narratives at play, providing both challenges and opportunities for financiers engaging with the Middle East.

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Will Middle East Markets Lead in 2026?

With new attacks, optimism that the region's tensions would be dealt with in a short duration of time faded, leaving concerns about the possible long-term effects of the disputes on economies. Iran's retaliation, targeting Gulf countries and strategic centers, has a direct effect on market dynamics. Severe fluctuations occurred in the markets of Gulf nations with the increasing danger perception, while sharp increases stood out in country danger premiums.

28. Taking a look at the climb in the five-year credit default swaps (CDS) of the nations in this duration, Iraq experienced the sharpest increase. The country's danger premium increased by around 140 basis points to 392. Bahrain's threat premium increased by 84 basis indicate 297, while Qatar's risk premium moved up by 13 basis indicate 45 in the exact same period.

Saudi Arabia's threat premium dropped by around two basis points to 80.4 in this process. Experts stated Saudi Arabia experienced relatively less effect from this circumstance thanks to its strong foreign exchange revenues. Stock exchange in the Gulf followed a blended pattern, while the UAE stock exchange became the one that fell the most since the start of the disputes that started with the US and Israeli attacks on Iran and spread out to other countries in the region.

Shares of petrochemical and energy business in the area, following a mainly positive trend in parallel with the rise in oil costs, slowed the decline in the indices. Selling pressure continued to work in the markets in the UAE, Bahrain, Qatar, and Kuwait, where extreme airstrikes happened. Issues about the country's security prompted a drop in realty and financial investment business shares on the UAE stock market.

Airstrikes on energy centers and lines, which heightened following market closures, were not yet priced into regional markets. Targeting some oil centers in the disputes and decreasing maritime traffic in the Strait of Hormuz, which has vital significance for oil shipments, increased energy costs and sustained international inflation risks upwards.

ANSR July GCC PRs 50DR+

Benefits of Allocating Capital in GCC Markets

The Reserve bank of the UAE (CBUAE) and the Central Bank of Kuwait (CBK) announced that their banking systems remained resilient. The CBUAE approved the "Financial Institutions Durability Bundle," which is supported by the reserve bank's one trillion dirhams ($ 270 billion) possession and aims to enhance the banking sector's stability in the face of remarkable conditions in worldwide and local markets.

The five main pillars of the plan aim to increase banks' access to financial liquidity and flexibility to support the UAE economy. Handling forex reserves exceeding one trillion dirhams ($ 270 billion) and a financial base coverage ratio of 119%, the bank confirmed the strong basics of the UAE's 5.4 trillion dirhams ($ 1.47 trillion) banking sector.

ANSR July GCC PRs 50DR+

A declaration from the Central Bank stressed that local banks continued to offer all banking services efficiently and reliably, even under current conditions. The declaration stated this success arised from banks enhancing their risk management systems, developing service connection and emergency situation plans, improving their digital facilities, and carrying out routine exercises mimicing possible situations in line with the Reserve bank's instructions.

Goldman Sachs, among the significant US banks, forecasted that the economies of Qatar and Kuwait might deal with a 14% contraction as oil shipments would decrease in a situation where the Strait of Hormuz remained closed for 2 months.