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GCC Stocks Drop on Geopolitical Pressure

GCC Stocks Drop on Geopolitical Pressure
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GCC Stocks Drop on Geopolitical Pressure

GCC Stocks Drop on Geopolitical Pressure

GCC stock markets dived on Monday trading amid increased geopolitical tension after Saudi and UAE oil tankers suffered “sabotage operations” near the Emirati territorial waters. They were also affected by the pressure of the US-China trade war.

The Saudi stock index dropped 3.55 percent, Abu Dhabi index 3.32 percent, Dubai Financial Market 3.97 percent and Kuwait Stock Exchange index 1.37 percent.

Saudi Arabia's benchmark index closed at 308.02 points lower at 8366.64 points on Monday, with trades worth more than SAR5.3 billion riyals ($1.4 billion).

More than 180 million shares were traded among more than 120,000 deals, with eight companies posting gains, while shares of 174 companies closed with decline.

The index of Saudi Nomu-Parallel Market closed Monday at 3424.31 points down 68.99 points and with tradings worth more than SAR2.5 million ($667 million).

The number of shares traded exceeded 140,000 among 134 deals.

In UAE, however, Dubai Financial Market index dropped by 3.97 percent, losing 104.29 points, to close at 2525.61 points.

Trading volume amounted to 231.1 million shares at a total value of AED300.1 million (about $82 million) after closing 4,599 deals for 36 shares.

In addition, eight sectors witnessed decline, headed by the goods sector by 7.49 percent, followed by real estate sector by 5.64 percent, investment sectors by 5.23 percent, insurance sector by 3.83 percent, banking sector by 3.49 percent, transport sector by 3.01 percent, services sector by 1.80 percent and communications sector by 0.98 percent.

The General index in Bahrain closed Monday at 1.416.15 points, down 11.56 points from the previous close, due to the decline in the indexes of commercial banks and investment, services and industrial sectors.

Bahrain Islamic Bank’s index closed at 758.79, down 19.52 points from its previous close.

Kuwait Stock Exchange ended its trading Monday with a decline in its general index by 59.5 points to reach the level of 5632.4 points, a 1.05 percent drop.

The total number of transactions of the index amounted to 125.9 million shares, through 5,826 transactions worth KD33.2 million (about $110 million).

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4 Factors Behind the Decline of Saudi Stock Market in H1 2025

Two investors monitor the trading screen in the Saudi financial market in Riyadh (AFP) 
Two investors monitor the trading screen in the Saudi financial market in Riyadh (AFP) 
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4 Factors Behind the Decline of Saudi Stock Market in H1 2025

Two investors monitor the trading screen in the Saudi financial market in Riyadh (AFP) 
Two investors monitor the trading screen in the Saudi financial market in Riyadh (AFP) 

Financial analysts and market specialists have identified four main factors driving the decline of the Saudi stock market during the first half of 2025. Speaking to Asharq Al-Awsat, they pointed to heightened geopolitical tensions in the region, ongoing trade disputes and tariffs between the United States, China, and Europe, oil price volatility, and persistently high interest rates. Collectively, these pressures have squeezed liquidity and weighed heavily on market performance.

Despite the downturn, analysts expect the market to gradually recover over the second half of the year, supported by potential global interest rate cuts, stabilizing oil prices, easing economic uncertainty, and forecasts of robust growth in Saudi Arabia’s GDP and the non-oil sector, alongside continued government spending on major projects.

The Saudi stock market recorded notable losses in the first six months of 2025, with the benchmark index retreating 7.25%, shedding 872 points to close at 11,163, compared to 12,036 at the end of 2024. Market capitalization plunged by around $266 billion (SAR 1.07 trillion), bringing the total value of listed shares to SAR 9.1 trillion.

Seventeen sectors posted declines during this period, led by utilities, which plummeted nearly 32%. The energy sector fell 13%, and basic materials dropped 8%. In contrast, telecom stocks advanced around 7%, while the banking sector eked out a marginal 0.05% gain.

Dr. Suleiman Al-Humaid Al-Khalidi, a financial analyst and member of the Saudi Economic Association, described the first-half performance as marked by significant swings. “The index rose to 12,500 points, only to lose nearly 2,000 points before recovering to about 11,260,” he said.

He attributed the volatility to several factors: regional geopolitical strains, oil prices dipping to $56 a barrel, and high interest rates, which constrained liquidity. He noted that financing costs for traders now range between 7.5% and 9%, historically elevated levels.

“The Saudi market posted the steepest decline among regional exchanges despite record banking sector profits, which failed to translate into stronger overall index performance,” he observed.

Looking ahead, Al-Khalidi anticipates three interest rate cuts totaling 0.75 percentage points by next year, which would bring rates down to about 3.75%. “That should encourage a recovery in trading activity, improve liquidity, and support an upward trend in the index toward 12,000 points, potentially reaching 13,500 if momentum builds,” he added.

Meanwhile, Mohamed Hamdy Omar, economic analyst and CEO of G-World, described the downturn as largely expected, citing external pressures and prolonged trade tensions between the US, China, and Europe. “Retaliatory tariffs dampened investor confidence globally, and Saudi Arabia was no exception,” he said.

Lower oil revenues also strained state finances, leading to a budget deficit of SAR 58.7 billion in the first quarter, further tightening liquidity. Trading volumes fell over 30% year-on-year.

Omar pointed out that changes to land tax regulations and heightened regional security risks also weighed on sentiment. Nonetheless, he expects gradual improvement in the second half of 2025, driven by anticipated rate cuts, rebounding oil prices, and continued large-scale public investments.

He stressed the need for vigilance: “Saudi Arabia remains among the most stable markets, thanks to proactive regulation and policies designed to attract foreign capital and bolster investor confidence.”