Understanding what’s driving regional capital markets — and what signals we should watch in the back half of the year: The Saudi IPO market made a strong showing in terms of volume and value in the first half of the year, the EGX is outperforming its regional peers year-to-date, and the UAE is holding steady despite regional volatility and weaker oil prices. Altogether, it’s been a strong year so far for regional capital markets.

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We sat down with EFG Hermes’ head of investment banking, Mostafa Gad, to break down what’s behind the momentum, what foreign investors are looking for, and how to know we’re on the right track for greater depth in capital markets. Gad also walked us through some of the stepping stones that helped the region’s most active markets achieve success.

Edited excerpts from our conversation:

Gad believes equity capital market (ECM) activity in the region is part of a multi-year trend rather than just a 1H 2025 phenomenon. The current cycle, he says, has been running strong for the past three to four years, fueled by structural reforms across the region.

IN CONTEXT- Saudi Arabia’s main index is down 10.0% YTD, while Dubai’s benchmark rose 18.5%, and ADX is up 9.5%. EGX is up 15.2% YTD.

The fundamentals in the region are far stronger than many expect, according to Gad. The risk factor is the biggest misconception foreign investors have about the region. Gad says the perception is far worse than the reality. From afar, the region might seem unstable — but their confidence in the region rises quickly once they actually visit and engage with the market directly.

Despite a rocky geopolitical landscape, Gad is cautiously optimistic about the second half of the year. Even with global headwinds such as the Trump administration’s trade policies, Gad isn’t too concerned about the impact of these developments on regional markets. In fact, he expects geopolitical tensions to ease, rather than intensify, in the near term. Markets have shown resilience, and if that holds, 2H could shape up nicely. Looking ahead, the pipeline for IPOs in the second half is expected to surpass that of the first half.

EFG Hermes has a packed calendar for the remainder of the year. The firm is preparing several issuances in Saudi Arabia, the UAE, and Kuwait. On the equity side, they’ve already closed four transactions and aim to complete another three to five before year-end. M&A and DCM pipelines are also very active.

THE LOCAL STORY-

Why Egypt is still lagging on listings: Chalk it up to a lack of deep domestic institutional capital. Big IPOs typically require foreign participation, and that had been on pause due to FX uncertainty and repatriation concerns. The good news? FX backlogs have cleared, repatriation is working as it should, and sentiment is slowly turning a corner.

What foreign investors want from Egypt: “Growth, plain and simple.” To attract foreign interest, Egyptian companies need to show robust growth, particularly in an inflationary environment, he explained, adding that with interest rates above 20%, dividend yields alone won’t cut it. Why invest in a stock when you can get a 20% zero-risk return? Gad says foreign investors are now looking for high-growth businesses with strong fundamentals and the resilience to withstand currency shocks.

Why National Printing is one to watch: National Printing’s IPO — which EFG is quarterbacking — is a transaction Gad sees as a model for how to structure IPOs in Egypt today. The company benefits from strong sector dynamics and sound financials, but what really stands out is the structure of the offering. A cornerstone investor was brought in early to anchor the book, adding credibility and encouraging local participation.

Could Egypt see more listings this year? Possibly, but don’t hold your breath. It will likely take another 6-12 months before the EGX sees larger offerings again. Investor confidence is building, but it takes time to translate that into action.

ELSEWHERE IN THE REGION-

What’s holding back the IPO pipeline in the UAE compared to regional peers? Saudi Arabia simply has a larger and more developed private sector than the UAE, according to Gad. Even without the big government listings, there are more companies ready to go public in Saudi. The UAE’s private sector, while dynamic, is smaller, hence fewer IPO candidates.

Authorities in the UAE understood that to build a vibrant and liquid equity market, they needed to list successful state-owned enterprises. Landmark IPOs such as DEWA and Salik helped attract investor attention, injected liquidity, and laid the groundwork for increased private-sector participation down the line.

Diversification is a key driver of resilience on the DFM: The exchange has shown resilience in its YTD performance largely because the market has somewhat decoupled from oil prices, thanks to its diversified economic drivers, Gad said. People have historically seen a strong correlation between real estate and oil prices. But that relationship seems to have been tested again this year, and it’s not holding up the way it used to.

And in Saudi, ECMs now offer remarkable diversity, Gad said, explaining that investors can tap into a wide range of sectors, from energy and infrastructure to healthcare and consumer goods. Each company brings a different story, management style, and growth potential, making the market both deep and dynamic.

Now the results speak for themselves: The Saudi market has been averaging around 20 listings per year — figures that were virtually unheard of in the past, he said, explaining that many of these offerings have been substantial in size, reflecting growing investor confidence and interest.

Tadawul has had some muted debuts, mostly due to stretched valuations, Gad said, adding that a correction may actually be a healthy development. This correction is viewed positively as a breather that allows for a reset toward more normalized valuation multiples. It also helps in creating more sustainable market capitalizations for listed companies.

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