Markaz: Kuwait outperforms most GCC markets amid reforms push and positive corporate earnings

Kuwait Financial Centre “Markaz” released its Market Review report for 2025. The report highlighted that Kuwait equity market was the second best-performer (+21.0%) among GCC markets in 2025, trailing only Oman (+28.2%), supported by strong corporate earnings of companies, especially banks, ongoing reforms momentum, increased foreign investor interest and a bullish economic outlook. Positive macroeconomic conditions such as robust non-oil economic activity, accelerating credit growth, an uptick in project awards, emphasis on fast-tracking Kuwait Vision 2035 projects, and interest rate cuts by the Central Bank of Kuwait (CBK) boosted investor optimism. Kuwait’s All Share Index (PR) increased by 21.0% and total return index advanced by 25.3% in 2025, driven by 19.9% gain in Kuwait banking index.

Among the banking stocks, Warba Bank and Kuwait International Bank were the biggest gainers, with total returns of 66.7% and 60.8% respectively during the year. Warba Bank recorded net profits of KD 38.5 million in 9M 2025, a growth of 159% y/y. Warba Bank’s stock price witnessed a sharp rise in mid-year, largely driven by the announcement of merger discussions with Gulf Bank. NBK and KFH registered total returns of 22.7% and 21.3% respectively during the year, supported by sustained strength in corporate earnings.

In 2025, Kuwait’s Main Market Index increased by 20.2%, and the Premier Market Index posted a growth of 21.2%. However, the main market index registered a mild decline of 0.2% during December 2025 as a result of profit-taking by investors. Among the Premier Market stocks, GFH Financial Group and Kuwait Real Estate Company were the largest gainers, with total returns of 115.2% and 70.4% respectively, for the year. GFH Financial Group’s stock price rally was underpinned by the repurchase of its own shares as per Boursa Kuwait disclosures and stable financial performance. Action Energy, the oilfield services provider was listed in Kuwait’s Premier market on December 17, 2025. The company sold 260 million ‌shares, or 45.9% of its capital, at 212 fils a share, raising KD 55 million ($179.25 million).

The CBK followed the interest rate moves of the U.S Fed in December 2025 and reduced its key discount rate by 25 bps to 3.5%. This was the third rate cut from CBK since the U.S Fed started its monetary easing cycle in September 2024 and brings the cumulative cut of CBK to 75 bps, compared to 175 bps for the U.S Fed.

Most of the GCC equity markets, except Saudi Arabia ended positive during the year supported by the strong performance of major blue-chip stocks and interest rate cuts in H2 2025. However, S&P GCC composite index registered a slight decline of 1.5% for the year weighed down by the 12.8% fall in Saudi equity index.  Despite the 0.9% decline in the Saudi equity index, the S&P GCC composite index was up by 1.0% in December 2025 owing to the interest rate cuts and positive U.S economic data. Decline in oil prices, tighter liquidity in the banking sector and failure of the new listings to match the stellar performance of equity market debuts in the previous year dampened Saudi’s equity market performance. Slow down in the pace of implementation of few giga projects added uncertainty regarding the progress of non-oil diversification. Saudi Aramco registered losses of 10.5% during the year driven by a drop in profits amid lower oil prices.  Banking stocks such as Saudi National Bank and Al Rajhi posted yearly total returns of 20.0% and 5.4% respectively. Dubai equity index increased by 3.6% in December 2025, extending the yearly gains to 17.2% on the back of a strength in real estate and tourism sectors. Emirates Integrated Telecommunications Company (Du) registered total returns of 39.7% for the year supported by positive earnings results, adoption of AI-ready digital infrastructure and secondary public offering of 7.55% of its total share capital. The company generated AED 2.18 billion in net profits during 9M 2025, an increase of 14.60% y/y driven by sustained growth across its mobile, fixed, and ICT segments. Emaar Properties delivered total returns of 18.3% during the year owing to robust growth in sales and launch of multiple flagship projects. Abu Dhabi Equity Index recorded returns of 6.1% in 2025 and 2.5% increase in December. Major blue-chips such as FAB and ETISALAT registered total returns of 34.1% and 17.7% respectively in 2025. Qatar equity index grew by 1.8% during the year supported by natural gas prices while moderate corporate earnings capped market gains. Oman was the largest gainer in the GCC, gaining 28.2% during the year on the back of the country’s ongoing efforts on non-oil diversification and capital market reforms.

GCC central banks mirrored the interest rate moves of U.S Fed in December 2025. The Saudi Central Bank reduced its repo rate by 25 bps to 4.25%. The UAE central bank lowered the base rate applicable to its overnight deposit facility by 25 bps to 3.65%. The Central Bank of Qatar reduced its repo rate to 4.10%.

Global markets ended the year on a positive note, with MSCI World Index and S&P 500 index up by 19.5% and 16.4% respectively during the year. However, the S&P 500 index ended flat with a negative bias in December 2025 owing to concerns on overvaluation of AI companies despite some support from U.S Fed interest rate cut, and solid consumer spending. The continued outperformance of technology stocks, optimism surrounding AI-driven growth, resilient valuations, and accommodative interest-rate environment drove strong market performance during the year.  Nasdaq index increased by 20.2% in 2025 buoyed by robust corporate earnings of technology stocks and investor enthusiasm over massive AI spending. In October 2025, NVIDIA’s market capitalisation surpassed USD 5 trillion following announcement that the company high AI chip orders, in addition to plans to build seven supercomputers for the U.S. government. The U.S Fed reduced the Fed fund target rate by 25 bps to the 3.50-3.75% range in its December meeting amid still elevated inflation and downside risks to employment rates.  The MSCI Emerging Markets Index went up by 2.7% in December, finishing the year with a strong gain of 30.6%. Chinese equities rose 18.4% in 2025 on the back of government stimulus and renewed confidence in consumer and corporate sectors.

The U.S. real GDP grew by 4.3% y/y in Q3 2025 compared to 3.8% y/y in Q2 2025 and well above estimates of 3% driven by increase in consumer spending. The U.S consumer price index (CPI) came in below analysts’ expectations at 2.7% y/y in November 2025 compared to 3.0% y/y in September.The yield on the 10-year U.S treasury note fell by 40 bps to 4.18% in 2025 amid U.S Fed rate cuts and lower-trending, albeit sticky inflation. However, the yield remained volatile during the year and fell to 3.97% in mid-October due to uncertainty over the interest rate moves of U.S Fed due to mixed economic signals.

Oil (Brent) prices ended the year at USD 60.85 per barrel and fell by 18.5% in 2025. Concerns over market oversupply, weakening oil demand, unwinding of OPEC+ oil production cuts and easing geopolitical risk premiums at various points during the year pressured oil prices.  U.S. sanctions on Russian oil, Russia–Ukraine tensions, potential disruptions in the Strait of Hormuz, and the U.S. blockade on Venezuelan exports briefly supported oil prices in early 2025. OPEC+ has paused oil output hikes for Q1 2026 after unwinding roughly 2.9 million bpd into the market since April. International Energy Agency (IEA) indicates global oil supply will exceed demand by almost 3.84 million bpd in 2026. Gold prices rallied during the year and closed at USD 4,314.12/oz., registering a gain of 64.4%.   The rally was fuelled by strong demand for the safe haven amid heightened geopolitical and economic uncertainties and robust central bank purchases.

The outlook for global equities in 2026 hinges on U.S. monetary policy decisions, global geopolitics, shifts in global trade tariffs and the performance of major tech companies amid ongoing AI enthusiasm. U.S. Fed officials have signaled that they expect to implement one interest rate reduction throughout 2026. GCC equity market performance is likely to be shaped by corporate earnings of banks, the pace of unwinding the rest of OPEC+ oil production cuts, regional economic reforms and Middle Eastern geopolitics.