Oman’s stock market is the best performer in the Gulf this year, up 24%, but a large share of the world’s professional money isn’t buying. Even when every other GCC exchange saw trading dry up in July, Oman went the other way, with share volume up 26.5%, value traded up 19.2%, and the number of individual trades up 29.8%, according to Kamco Invest’s July monthly report.

And while Oman was the only market in the region to rise on all three counts, its index still fell 3.1% last month. “On the surface, [Oman] was a market that woke up: volume, value and trade count all up. Look closer, and you see a handful of names doing the work,” Ramon Pedrosa, CEO and founder of European Equity Research Partners, tells EnterpriseAM. Bank Muscat, OQ Base Industries and Sohar International Bank accounted for roughly 45% of the month’s turnover between them, according to our calculation from Kamco’s figures.

The pullback in the index has a longer arc behind it. “The drop in the MSX from April onwards was primarily driven by selling by some regional foreign investors and non-inclusion of Oman in the EM index,” says Muhammad Ahsan, group head of treasury, FI and investment banking at Bank Nizwa. “This was a key driver of the rerating in the market as there were significant inflows from foreigners in the first quarter in anticipation of an upgrade that didn’t materialize.”

The buyers on MSX were largely domestic. Pedrosa points to “local institutions as the net buyers,” to “dividend season pulling in sovereign-linked money,” and to “some capital rotating out of Saudi mid-caps,” which he says moved into Omani names. That is a flow between two Gulf markets that shows up in neither country’s numbers. Ahsan adds a domestic mechanism that helps explain the July surge: “Activity in the market in July was primarily driven by local institutional and retail investors. June was mostly dominated by the OMIFCO IPO and when the refunds were paid and the share started trading, the returned cash plus capital gains from OMIFCO were put to work in the broader market and helped in driving volumes higher.”

“Volume rose. Depth stayed thin,” Pedrosa tells us. Much of Oman’s market value is not for sale at any price. Government and sovereign vehicles hold structural stakes in big players like Bank Muscat, OQ and Sohar International Bank. “A lot of what shows up as market cap is not actually buyable,” Pedrosa says. “The tradeable share is meaningfully smaller than the headlines suggest. Comparing Omani liquidity to Saudi or the UAE without adjusting for that gives you a misleading picture,” he tells us, adding that “Concentration is a float problem before it is an interest problem.”

Ahsan sees the same concentration and reads it the other way. “The Omani market is dominated by the heavyweights such as Bank Muscat, Sohar International and the OQ entities. I would call it a feature and not a bug,” he tells us. “Volumes are reasonably high in few other scrips which offer good liquidity to investors. This is one key area where the focus is to add more names and improve free float to help the market get upgraded to the EM status.”

The second barrier for foreign capital is the index rulebook. Oman is on the frontier indices rather than in emerging markets. An allocator with “a mandate written for MSCI EM cannot touch Muscat,” regardless of the year it is having, Pedrosa says. In that sense, the block is structural.

For Ahsan, thin foreign participation has been a cushion, but only a temporary one. “Lower foreign participation shielded Oman during the last five months as outflows were easily offset by domestic investors buying,” he says. “However, this is a short term benefit and market depth and breadth will improve with higher foreign interest, which is a key focus behind the reforms.” Ahsan sees more foreign investors coming in as more paper hits the market and new reforms make for a more attractive environment.

How Oman fares against the wider region

Oman’s market is small, and that is what makes its July trading figures interesting. All the companies listed on MSX are worth USD 54 bn, whereas Saudi’s listed firms are worth USD 2.5 tn, roughly 46 times more. And despite this disparity in size, the Kingdom’s trading volume was only about 10x Oman’s — USD 23.1 bn against USD 2.4 bn. Factoring the relative size difference, Oman comes out nearly five times busier: About 4.4% of everything listed in Muscat changed hands in July, against 0.9% in Riyadh and 0.8% in Abu Dhabi. In Bahrain, the figure was 0.04% despite a 4.2% drop in its index.

Put the other way round, SAR 99 of every SAR 100 of listed Saudi value sat still for the entire month. The two exchanges the region is usually judged by, the Tadawul All Share and the FTSE ADX, each turned over less than one percent of themselves in July. That matters for how much to trust the headline changes in stock prices. Abu Dhabi’s index rose 1.1% on very little trading, so the gain rests on relatively few transactions, but Muscat’s fell 3.1% on heavier trading for its size, meaning more buyers and sellers actually agreed on a price.

Pedrosa argues those figures still understate Oman. He points to the fact that many of the shares available in theory in MSX are shares that will never trade hands because they are held by long-term strategic investors, such as governments and founding families. “A lot of what shows up as market cap is not actually buyable,” he tells us. “The tradeable share is meaningfully smaller than the headlines suggest. Comparing Omani liquidity to Saudi or the UAE without adjusting for that gives you a misleading picture.” He names Bank Muscat, OQ and Sohar International Bank as the cases in point, all three carrying structural state stakes. Strip those out and Oman’s denominator shrinks, which pushes its turnover figure higher still, he argues.

We can’t yet size that adjustment, and it cuts both ways. Neither MSX releases nor research from players like Kamco include a monthly freefloat figure, so how much of Oman’s USD 54 bn is genuinely available for purchase is not something we can put a number on. And Riyadh and Abu Dhabi carry heavy state ownership too, through sovereign wealth funds, so their denominators are likely also overstated. The direction of the adjustment favors Oman, on Pedrosa’s reading, because the concentration in Muscat is more extreme. The size of it is an open question, and worth holding as one.

In the UAE, ADX’s 1.1% monthly gain, one of the bright spots in the Gulf heavyweights in July, came alongside a 35.3% fall in share volume and a 23.4% fall in value traded. Century Financial chief investment officer Vijay Valecha read the month as investors turning choosy rather than negative, “favoring fundamentally strong companies while [realizing gains] in stocks that had rallied sharply in recent weeks.” Both things can hold at once. Buyers were selective, and there were not many of them.

Money moves

While foreign investors appeared more or less bearish on the GCC even in July, they turned out for EGX. Foreign investors turned net buyers of Egyptian equities for the first time in a quarter, picking up EGP 1.4 bn, and the EGX30 rose 5.85% to close at 53.4k points, according to the bourse’s July monthly report (pdf).

The caveat is that almost all of it went through one stock. Foreigners bought a net EGP 1.24 bn of banks. “CIB holds the heaviest weight in the EGX30 index, while also having the largest free float among listed stocks,” Tycoon Securities’ Sameh Gharib told us. “This is the primary criterion foreigners look for when entering stocks, so that they can easily enter in the volumes they desire and exit just as easily.” CI Capital managing director and head of research Monsef Morsy put the knock-on plainly: “Any foreign buying into the market will, of course, go partly into CIB,” which “triggers a sector-wide rerating afterward.”

And local retail sold into it. Egyptian retail investors were net sellers of EGP 2 bn while local institutions bought EGP 1.3 bn. Across every nationality, institutions bought roughly EGP 2 bn, and retail sold almost exactly the same amount. Ownership moved from retail hands to institutional ones without the market breaking.

The disagreement worth watching

Saudi Arabia is where that thesis that foreigners want a stock with a sizable freefloat gets complicated. After all, foreigners have somewhere to trade in size on the Tadawul, and the kingdom opened barrier-free access to every category of foreign investor in February, but trading still fell. Whether that means foreign money left, or simply stopped moving, is now something two people we spoke to describe differently.

Argaam Investment business analysis director Yousef Al Yousef says foreign money did not leave. “I don’t see a significant decline in foreign investor ownership in the Saudi market,” he tells us. “On the contrary, I see that there is more positioning in search of opportunities that might exist.” When foreigners do trim, he says, someone predictable steps in: “Whenever there’s pressure from foreign investors and a temporary exit or liquidation of some of their portfolios amidst existing geopolitical tensions, Saudi institutional investors step in to support the market, and this has happened more than once.”

CG Invest head of financial market analysis Aseel Al Aranki read foreign money behavior differently. Qualified foreign investors “stay away” the longest until there’s clarity, and the kingdom’s February move to barrier-free foreign access has failed so far to convert into trading. “The CMA delivered the access; the market hasn’t yet delivered the liquidity,” Al Aranki tells us. Tadawul’s own 1H results show daily average traded value down 9.11% against 1H 2025.

The thread running through July is the same in every market: Freefloat volumes decide whether foreign money shows up. Egypt had it in CIB and the money came. Saudi Arabia has it, and the money stayed home anyway. Oman barely has it — and is the region’s best performer regardless. That is the puzzle Ahsan’s read leaves on the table. His “feature, not a bug” phrasing isn’t a denial of the concentration Pedrosa flags, but rather a claim about direction. The heavyweights that make Muscat thin today are also where the reforms start, and the fix he describes — more listings, higher free float, rules written to pull foreigners in — is an attempt to turn the short-term cushion of low foreign participation into something more durable.