Analysts cite investment grabs amid volatility, prevailing caution in GCC

GCC financial markets are experiencing volatility amid rising geopolitical tensions, which has weighed on investor sentiment and pushed them toward greater caution and anticipation, alongside ongoing absorption of previous corrections and mixed performance across markets.

Analysts told Argaam that current movements are mainly driven by geopolitical developments, while economic fundamentals remain supportive due to the resilience of economies and continued diversification programs. However, market responses vary depending on exposure to news and events.

Data compiled by Argaam showed mixed performance across Gulf market indices during the period from February 28 to March 29, 2026. The Muscat Stock Exchange saw an increase of 8.59%, followed by the Saudi Exchange (Tadawul) with 3.43%, while other markets declined between 2.53% and 15.2%, with Dubai Financial Market seeing the largest drop.

Market Performance

Joseph Daherieh, Managing Director at TickMill

Joseph Daherieh, Managing Director at TickMill, said Gulf markets are experiencing volatility amid current geopolitical tensions, particularly as expectations shift regarding the possibility of a diplomatic solution and the duration of disruptions. He noted that these movements reflect investor caution, with geopolitical factors remaining the primary driver of sentiment.

In contrast, local fundamentals remain generally supportive due to the strength and resilience of economies and companies. Valuations have also become more attractive after recent corrections. Regional economies continue to benefit from diversification programs and non-oil growth, underpinning a positive long-term outlook despite temporary pressures, he added.

Financial markets analyst Abdullah Al-Jubaili

For his part, financial markets analyst Abdullah Al-Jubaili said that technically, the Saudi market was already on a downward trend before the war, which accelerated its drop to a key support level around 10,200 points. “The index then rebounded by about 800 points, confirming the strength of this support. The market has begun pricing in the presence of war in the region, but any developments could trigger further correction, though breaking below 10,200 is unlikely unless major changes occur,” he continued.

He also explained that Tadawul performed differently from other GCC markets, which saw deeper declines because they had not begun correcting before the war, leading some to hit temporary trading halts in Dubai and Abu Dhabi exchanges.

Economic analyst Ali Al-Anzi

Economic analyst Ali Al-Anzi noted that markets have become more news-driven than reliant on financial or technical analysis, with investor behavior being the most influential factor.

He highlighted that the Saudi market is trying to maintain the 11,000-point level and is among the best-performing markets since the start of the war, backed by Saudi Arabia’s strategic position and rising energy prices.

According to the analyst, petrochemicals and basic materials sectors are among the biggest beneficiaries, contributing to positive performance, with the market achieving returns exceeding 5.5% year-to-date and 2.5% to 3% since the war began.

Al-Anzi said UAE markets were affected due to attacks, while other markets recorded limited losses.

Junaid Ansari, Head of Investment Strategy and Research at Kamco Invest

Junaid Ansari, Head of Investment Strategy and Research at Kamco Invest, said markets are currently more influenced by geopolitical developments than fundamentals, leading to varied performance across Gulf markets depending on their exposure to the conflict.

“Saudi Arabia has been relatively less affected since the start of the war, both materially and in terms of investor sentiment, resulting in gains including the rise in Aramco’s stock. Markets are likely to remain range-bound and under pressure until negotiations begin and de-escalation efforts take shape,” Ansari continued.

Meanwhile, Oman’s market gains are driven by two main factors: its distance from the conflict zone, which limited disruptions, and ongoing reforms aimed at inclusion in the MSCI Emerging Markets Index, resulting in record gains. Other Gulf markets declined depending on their exposure to the war, he added.

Investment Opportunities

Daherieh emphasized that current volatility presents both opportunities and risks, as declines have improved valuations and created attractive entry points, especially in fundamentally strong stocks, while geopolitical tensions continue to fuel the state of uncertainty.

For his viewpoint, Al-Jubaili said that an end to the war would lead to sharp gains in Gulf market indices. However, with no clear signs of an end yet, liquidity levels are expected to remain stable without significant inflows into the Saudi market, as many investors currently prefer to adopt a “wait and see” approach.

Al-Anzi highlighted that volatility represents a mix of opportunities and risks, with some companies trading at low levels while others are expected to generate higher revenues, especially in the basic materials sector.

Markets are approaching bottom levels in several sectors such as banking and telecommunications. However, sectors like real estate, financial services, and basic materials could be more negatively affected if the conflict escalates. Defensive sectors such as food, beverages, pharmaceuticals, and healthcare may slow down or decline if the conflict ends, Ansari continued.

Performance Outlook

Daherieh said continued tensions will keep markets under pressure and volatile, with some support from oil prices, while de-escalation could quickly improve risk appetite and bring back investment flows, particularly into banking and real estate sectors.

Meanwhile, Al-Anzi stated that escalation and targeting infrastructure could lead to deeper impacts, while limited conflict may support relative stability and a resolution would drive stronger market gains.

Ansari added that Kamco Invest is basing its forecasts on three scenarios: continuation of the current war, escalation, or a temporary/permanent ceasefire. “In the first two scenarios, Gulf markets are expected to decline further due to supply chain disruptions and their impact on a wider group of industries. In the third scenario, the most affected sectors—especially in Dubai—are expected to rebound. However, a drop in oil prices to $90 per barrel would reduce gains in the Saudi TASI index,” he continued.

Most Attractive Sectors

Daherieh highlighted that defensive sectors such as telecommunications, utilities, and food become more attractive during tensions due to stable revenues, with liquidity likely returning to other sectors when sentiment improves.

Meanwhile, Al-Jubaili stated that logistics companies are among the biggest beneficiaries from the war due to supply chain disruptions, while petrochemicals and aviation are most negatively affected, especially if the Strait of Hormuz is closed, as it represents the key supply line for products of these companies for export outside Saudi Arabia.

Al-Anzi added that energy and banking sectors have strong support, along with telecommunications, utilities, and food sectors.

Ansari also noted that telecommunications, utilities, and food are defensive sectors expected to perform well during conflicts. “Saudi Arabia’s role in supporting neighboring countries through logistics hubs and ensuring food supply also strengthens companies in these sectors through increased activity and future revenue flows,” he added.

Foreign Investor Flows

Foreign investor sentiment is currently cautious, but GCC markets remain attractive to international investors due to strong fundamentals and ongoing economic reforms, with expectations of long-term inflows, said Daherieh.

Al-Anzi noted that foreign investors are currently increasing risk premiums and reducing holdings, though inflows may return if conditions improve.

For is part, Ansari said foreign investors were net sellers of Gulf equities during March, except in Oman where they were net buyers. He expects institutional investors to remain cautious and closely monitor regional developments before returning to the market.