Will Middle East Markets Grow in 2026?

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

In general, as regional markets continue to progress, they reflect the wider economic and geopolitical narratives at play, providing both difficulties and chances for investors engaging with the Middle East.

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With brand-new attacks, optimism that the area's stress would be dealt with in a short time period faded, leaving questions about the possible long-lasting effects of the disputes on economies. Iran's retaliation, targeting Gulf nations and strategic facilities, has a direct effect on market dynamics. Serious fluctuations happened in the markets of Gulf countries with the increasing risk perception, while sharp increases stuck out in country risk premiums.

The nation's risk premium increased by approximately 140 basis points to 392. Bahrain's danger premium increased by 84 basis points to 297, while Qatar's risk premium moved up by 13 basis points to 45 in the same period.

Saudi Arabia's danger premium dropped by roughly two basis points to 80.4 in this process. Experts stated Saudi Arabia experienced reasonably less effect from this scenario thanks to its strong forex profits. Stock exchange in the Gulf followed a combined pattern, while the UAE stock exchange ended up being the one that fell the most since the beginning of the disputes that began with the United States and Israeli attacks on Iran and infected other countries in the region.

Shares of petrochemical and energy companies in the region, following a mainly positive trend in parallel with the rise in oil costs, slowed the decrease in the indices. Selling pressure continued to be effective in the markets in the UAE, Bahrain, Qatar, and Kuwait, where extreme airstrikes occurred. Concerns about the nation's security prompted a drop in real estate and investment firm shares on the UAE stock market.

However, airstrikes on energy facilities and lines, which intensified following market closures, were not yet priced into local markets. Targeting some oil facilities in the conflicts and decreasing maritime traffic in the Strait of Hormuz, which has important importance for oil deliveries, increased energy expenses and sustained global inflation threats upwards.

ANSR July GCC PRs 50DR+

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The Reserve bank of the UAE (CBUAE) and the Reserve Bank of Kuwait (CBK) revealed that their banking systems stayed resilient. The CBUAE approved the "Financial Institutions Durability Bundle," which is supported by the central bank's one trillion dirhams ($ 270 billion) asset and intends to reinforce the banking sector's stability in the face of extraordinary conditions in international and regional markets.

The five main pillars of the plan goal to increase banks' access to monetary liquidity and versatility to support the UAE economy. Managing foreign exchange reserves going beyond one trillion dirhams ($ 270 billion) and a financial base protection ratio of 119%, the bank verified the strong fundamentals of the UAE's 5.4 trillion dirhams ($ 1.47 trillion) banking sector.

ANSR July GCC PRs 50DR+

A declaration from the Reserve bank highlighted that regional banks continued to offer all banking services efficiently and dependably, even under present conditions. The statement stated this success arised from banks strengthening their danger management systems, establishing organization continuity and emergency strategies, enhancing their digital infrastructure, and conducting regular workouts mimicing possible situations in line with the Central Bank's directives.

Goldman Sachs, one of the significant United States banks, forecasted that the economies of Qatar and Kuwait could face a 14% contraction as oil deliveries would reduce in a circumstance where the Strait of Hormuz stayed closed for two months.