Gulf stock exchanges are growing in importance, but they’re still a long way from becoming capital market hubs -Fitch

Gulf exchanges are becoming a real alternative to bank lending, but they are still too concentrated and too thin to work as full capital market hubs, Fitch Ratings said in a note shared with EnterpriseAM. GCC stock markets had a combined market cap of c. USD 4 tn this month, while debt capital markets reached USD 1.2 tn outstanding at the end of 1H 2026, 42% of it in sukuk.

The concentration problem is sharpest in the region’s two biggest markets. Five companies account for c. 60% of the ADX’s market cap, while on the Saudi exchange (which holds 63% of total GCC market cap), Aramco alone accounts for c. 65% of market cap. The ADX has 18% of GCC market cap and the DFM 7%.

Most Gulf debt still lists abroad. The ADX and the DFM list mostly equities, and most GCC hard-currency sukuk and bonds are listed offshore. The London Stock Exchange lists more than half of global USD sukuk, and 95% of those come from the Middle East. The regional exception is Nasdaq Dubai, which lists more than 28% of global outstanding sukuk and over USD 140 bn in debt. Fitch puts the slow growth of domestic debt markets down to a corporate funding culture that leans on bank financing.

The one bright spot in local debt is Saudi Arabia. The Saudi Exchange has a more developed local-currency debt market than its GCC peers, Fitch says, built on SAR sovereign sukuk that the government is issuing to create a domestic yield curve. That market is about to widen: SAR government sukuk will join JPMorgan’s GBI-EM index from 2027, which will increase inflows into SAR paper issued in Riyadh. Foreign investors already took 15% of the kingdom’s primary sovereign debt issuance in 1H 2026, up from 12% in 2025. Elsewhere in the Gulf, local-currency debt markets are still nascent, and Nasdaq Dubai’s weight comes from hard-currency sukuk.

Why it matters: Fitch’s diagnosis comes after a rough year for UAE equity issuance. Dubai Holding, EGA, and Binghatti have all paused or shelved listings, as we reported earlier this year; Al Habtoor dropped its DFM plans entirely; and Airtel Money is taking its IPO to London instead of the UAE, citing regional unrest. In Saudi Arabia, the region closed 1Q 2026 with just four IPOs raising a combined USD 296.6 mn — the weakest first quarter since 2018, but the slowdown started before the war. Analysts told us that stretched valuations and weak post-IPO performance had already cooled the market before the first strikes.

What’s next: Bankers expect a recovery across the region later this year and into 2027, as we’ve reported. In the UAE, analysts see follow-on offerings leading any reopening, not fresh IPOs. In Saudi, the CMA’s consultation on bank-guaranteed IPOs is the near-term test of whether regulators can bring back buyers burned by the last crop of listings. Delivery app Ninja is also eyeing a Tadawul listing of up to USD 1 bn by late 2026 or early 2027.

MARKETS THIS MORNING-

Asian markets opened in the green earlier today, gaining for the first time in three sessions, with Japan’s Nikkei rising 1.2% and South Korea’s Kospi advancing 0.7%. The MSCI Asia Pacific Index gained 0.4%, driven by tech stocks following a rally in US semiconductor shares.

THE CLOSING BELL-

The DFM fell 0.2% yesterday on turnover of AED 591.7 mn. The index is down 1.0% YTD.

In the green: Dubai Islamic Ins. and Reinsurance Co. (+4.4%), Drake & Scull International (+3.7%), and Shuaa Capital (+1.9%).

In the red: Salik Company (-1.6%), GFH Bank (-1.6%), and Al Salam Bank (-1.4%).

Over on the ADX, the index fell 0.3% on turnover of AED 1.1 bn. Meanwhile, Nasdaq Dubai was up 0.2%.