Positive forecast for Gulf stock markets in 2024: Analysts

The trading floor of one of the GCC's stock markets

The GCC stock markets delivered mixed performance in 2023, with some markets reporting solid gains and others posting declines. 

The GCC markets are expected to see positive developments in 2024, analysts told Argaam, backed by several factors such as higher oil prices and the continued flow of foreign investments to the region.  

The GCC equity markets were variably affected by geopolitical and economic conditions, as well as interest rates last year. 

Performance of Stock Exchanges in 2023 

The Saudi Exchange (Tadawul), the largest market in the Arab world, closed 14.2% higher last year, while Dubai Financial Market (DFM) was GCC’s top performer, ending the year with a 21.7% gain, said Amr Zakaria Abdo, a financial analyst. 

Meanwhile, Abu Dhabi Securities Exchange (ADX), the region’s second largest market in terms of value, ended 6.2% lower in 2023.

Amr Zakaria Abdo, a financial analyst

The Qatar Exchange (QE) closed 2023 up 1.4%, while Bahrain Bourse recorded a 4% increase. The Muscat Stock Exchange and Boursa Kuwait fell 7.1% and 6.5%, respectively. 

Egypt's EGX30 Index emerged as the best performer in the Middle East, with more than 70% gains last year. Morocco came in second place, gaining 13%. Lebanon increased 10%, Tunisia nearly 8%, and Jordan's fell about 3%. 

Ali Al-Anzi, a Kuwaiti economic adviser, indicated that the GCC markets saw remarkably mixed performance in 2023, with DFM being the top performer, followed by Tadawul.

Ali Al-Anzi, a Kuwaiti economic adviser

Meanwhile, Kuwait and Muscat were the worst-performing bourses last year, with a nearly 7% decline each. Further, Qatar, ADX and Bahrain reported limited changes by year-end, while Qatar managed to reverse losses by the end of 2023.  

The GCC markets showed periods of normalization in some sessions before performance varied differently driven by geopolitical, economic and international conditions.  

Hamad Al-Olayan, a financial analyst, described 2023 as an exceptional year, noting that Tadawul-listed companies, particularly the banking sector with the largest weight, delivered historic results during the first three quarters.  The banking sector, marked by consistent growth, continues to attract significant attention from local and foreign institutions. 

Hamad Al-Olayan, a financial analyst

He also indicated that interest rate hikes contributed the most to the market volatility since markets started to respond following a change in the tone of the US Federal Reserve. 

Outlook for GCC Markets in 2024

Al-Olayan believed that the Kingdom’s economic indicators show strong growth at all levels, with the Kingdom hosting Expo 2030 and 2034 World Cup that will help enhance growth of all sectors, led by tourism, building, construction, banking and cement. 

All sectors are expected to benefit from hosting these events and mega projects that are moving ahead, he said, adding that many foreign companies will head to the Kingdom due to the government efforts to facilitate investment and work regulations. 

This year will likely see positive developments, but interest rates may take some time to gradually decline by year-end, which will eliminate the burden on the debt-stricken companies, Al-Olayan said.  

Some companies witnessed significant declines over the previous period, he said, adding that the market will reprice sectors going forward, such as banking, cement, insurance, construction and REITs. 

The outlook remains bullish for 2024, Abdo said, expecting the GCC stock markets to continue witnessing robust growth, led by Saudi Arabia and the UAE. 

He expected economic expansion would strengthen, especially in the non-oil sector, supported by large government spending and stability of oil prices, as well as initial public offerings, which would enhance the attractiveness of stock markets for investors, as was the case in the past two years. 

Furthermore, Abdo felt that the GCC markets would show sustainable growth in 2024, especially the Saudi and UAE markets, noting that the Egyptian Stock Exchange would perform as it did in2023, since the local currency devaluation makes corporate valuations attractive to foreign investors. 

On the other hand, Al-Anzi expected the Kuwaiti and Omani markets to be the most active since the beginning of 2024, to be followed undoubtedly by Tadawul, given the volume of spending on the economy and Vision 2030. 

GCC stock markets ended 2023 on a mixed note as four out of seven markets moved higher, topped by Dubai, which soared nearly 22%, or 724 points, to close 2023 at 4,059.8 points, buoyed by the strong recovery in the UAE real estate sector and listing of two companies, according to data available with Argaam. 

The Tadawul All Share Index (TASI) came in second, jumping 14% to close last year at 11,967.4 points. The Saudi benchmark gained 1,489 points, scaling an 18-year high. The Saudi market implemented six market enhancements. The jump was also driven by the Capital Market Authority’s (CMA) approval of the foreign investment regulations, stock splits, increase in new listings and completion of two mergers.   

The Bahrain All Share Index closed out the year 4% higher at 1,971.5 points. The Qatar Stock Exchange ended marginally higher, adding 150 points to 10,830.6.  

On the other hand, Boursa Kuwait declined the most among peers, shedding nearly 8% to 7,477 points. It lost 639 points since the beginning of last year due to higher inflation rates.   

Muscat Stock Exchange (MSX) dropped 7% to 4,514.1 points. Year to date, the bourse shed 343 points. Abu Dhabi Securities Exchange (ADX) also fell by 6% to close at 9,577.9 points.   

The mixed performance of the GCC markets was attributed to the economic recession worldwide and fluctuations stemming from the global banking system crisis following the collapse of Silicon Valley Bank and Credit Suisse. Moreover, interest rates were hiked four times in 2023 to curb inflation in response to volatile oil prices.