Monday, 20 July 2026
Foreign participation in Gulf stock markets weakened during the second quarter of 2026 as investors became more cautious amid geopolitical uncertainty, shifting energy markets and changing global financial conditions. While overseas investors remained buyers over the first six months of the year, inflows slowed considerably compared with the same period in 2025, highlighting a more selective approach to regional equity investments.
The regional picture varied significantly between markets. Saudi Arabia stood out as the only GCC exchange to continue attracting international capital throughout the quarter, supported by regulatory reforms that broadened access for overseas investors. In contrast, exchanges in Dubai, Kuwait, Qatar, Abu Dhabi, Oman and Bahrain all experienced capital outflows, with Dubai recording the largest decline in foreign investment during the period.
Market conditions were shaped by several external factors, including heightened tensions in the Middle East, disruptions affecting maritime trade routes around the Strait of Hormuz, fluctuating oil prices and uncertainty surrounding global interest rate policies. Seasonal holidays also contributed to lighter trading activity across regional exchanges.
Regional investors provided some support to markets during the quarter. Investors from GCC countries collectively shifted from selling to buying shares, reversing the trend seen at the beginning of the year. Saudi Arabia and Oman attracted the strongest regional inflows, while several neighbouring exchanges continued to experience net selling from investors within the Gulf.
Saudi Arabia’s market continued to demonstrate a different pattern from the rest of the region. Although domestic retail investors remained sellers, institutional investors increased their purchases, while foreign participation strengthened following the Kingdom’s decision to allow wider international access to its stock market from February 2026. Despite temporary periods of caution linked to regional tensions, overseas investors resumed buying later in the first half of the year, helping maintain positive overall inflows.
Trading activity across GCC exchanges presented a mixed picture. The number of shares changing hands declined compared with the previous quarter as activity slowed across most markets. Kuwait was the only exchange to record a notable increase in trading volumes, while Abu Dhabi, Dubai, Oman, Saudi Arabia and Qatar all reported lower turnover.
Although fewer shares were traded, the total value of transactions increased across the region, indicating that investors concentrated on larger or higher-priced deals. Saudi Arabia remained the largest contributor to overall trading value, while Kuwait recorded the strongest quarterly improvement, increasing its share of total GCC trading activity. Bahrain and Qatar also reported modest growth in the value of trades, whereas Abu Dhabi, Dubai and Oman experienced declines.
Saudi-listed companies continued to dominate regional trading. Half of the ten most actively traded stocks in the GCC were listed on the Saudi exchange, reinforcing the Kingdom’s position as the region’s largest equity market. Companies from the UAE also featured prominently, while Kuwait contributed one company to the top-ten ranking. Together, these leading stocks accounted for almost a quarter of the total value traded across GCC exchanges during the quarter.
Financial institutions remained the most active segment of the market, generating the largest share of trading value. Materials, property and energy companies also attracted solid investor interest, while sectors such as food and beverages, transportation and capital goods recorded weaker trading activity. Looking at the first half of the year as a whole, overall trading values edged lower than a year earlier, although banking and materials continued to outperform many other sectors.
The second quarter demonstrated that investor confidence across the Gulf remains resilient but increasingly selective. While geopolitical developments and global macroeconomic uncertainty prompted greater caution, Saudi Arabia continued to attract international capital, underlining the importance of market reforms and liquidity in shaping investment decisions across the GCC.
