Global Market Portfolio

Capital transformation is expanding Gulf assets

The Gulf region is emerging as a global investment hub, driven by capital reforms and inclusion in global indices. Rapid growth in IPOs, sukuk, and private equity is attracting diverse investors. Despite limited accessibility, strategic shifts signal long-term potential.

20 July 2026 5 min read

Frederic Dodard, CFA, FRM

Head of Portfolio Management, ISG, EMEA

Amy Le, CFA

Investment Strategist

The Middle East became part of the global investment opportunity in the 2010s when it was included in several global indices. Since 2019, the region has become increasingly relevant to the GMP. As a result, it is now important to assess not only public assets, but also private equity and private credit across the region.

We also analyzed the size of sukuk markets across different countries, recognizing it as one of the region’s fastest-growing segments. While the investable market size in the GCC remains relatively low due to factors such as high ownership concentration and foreign investment restrictions, the region is undergoing significant economic transformation. These developments are steadily increasing its weight in the GMP and opening up new investment opportunities across sectors and countries.

The Gulf region is still underrepresented

Despite this progress, the region’s investable market remains limited, especially within the Gulf Cooperation Council. The GCC has the lowest ratio of investable assets to total equity market capitalization at 25%. By comparison, the ratio is 32% for global emerging markets and 83% for developed markets.

Figure 1: Investable assets in Middle East lowest among regions

As of Q1 2026

USD Billion
	Total equity market cap	Investable equity market cap	Ratio, Investable vs. Total
Total ME	4,370	1,111	25%
EM	36,798	11,946	32%
DM	105,460	87,343	83%
Global	142,258	99,290	70%

Source: LSEG, Bloomberg, Thomson Reuters, Preqin, World Gold Council, FactSet, MSCI, J.P. Morgan, State Street Investment Management, as of March 31, 2026

Several factors contribute to high ownership concentration and limited foreign investment access in certain sectors categorized as strategic. For instance, Saudi Arabia has the largest total equity market capitalization in the region, valued at USD 2.6 trillion as of March 2026, with Aramco accounting for approximately two-thirds of this figure.

Saudi Arabia’s investable market capitalization was USD 371 billion, or 14% of the total equity market capitalization of the Middle East as of March 2026 (Figure 2).

Figure 2: Saudi assets dominate the Middle East Portfolio (USD billion)

As of Q1 2026

USD Billion
	Total equity market cap	Investable equity market cap	Ratio, investable vs. total
Bahrain	14	3.6	25%
Egypt	31	11	34%
Israel	561	381	68%
Jordan	34	4.6	14%
Kuwait	143	81	57%
Morocco	96	21	22%
Oman	35	11.9	34%
Qatar	157	73	46%
Saudi Arabia	2,620	371	14%
UAE	679	154	23%
Total ME	4,370	1,111	25%
EM	36,798	11,946	32%
DM	105,460	87,343	83%
Global	142,258	99,290	70%

Source: Thomson Reuters, Bloomberg, PreQin, World Gold Council, State Street Investment Management, as of March 2025

Middle East Portfolio now includes more non-traditional assets

As of March 2026, the combined investable market capitalization of equities, bonds, private equity, and private debt across Middle Eastern countries totaled USD 2.4 trillion, representing 1.1% of the GMP (Figure 3). That is a substantial increase from Q4 2019, when the same aggregate capital base stood at USD 677.0 billion.

Issuance activity is on the rise

The Middle East represents 0.8% of the global equity market capitalization, down from 1.1% in Q1 2025 but up from 0.2% in Q4 2019.

IPO activity in the GCC has surged over the past 25 years, helping establish the region as an important investment hub. In 2024, the GCC recorded a record USD 12.9 billion in IPO proceeds, underscoring strong investor confidence and continued momentum in local stock exchanges. Although the number of IPOs declined modestly in 2025, largely because there were fewer large-cap offerings and a greater tilt toward small- and mid-cap deals, especially in the second half, total funds raised also came in below the prior year. Even so, the region remained resilient despite a sluggish global market backdrop.

Saudi Arabia led GCC IPO activity in 2025, raising USD 4.2 billion across 36 IPOs and accounting for 72% of the region’s total proceeds. Across the GCC as a whole, issuers raised USD 5.8 billion through 41 IPOs, a 55% decline from 2024, as countries continued to deepen their capital markets in an effort to diversify away from oil dependence. The UAE ranked second, raising USD 1.1 billion from three IPOs. Oman raised USD 333 million through Asyad Shipping Co., while Kuwait raised USD 180 million through Action Energy Co.’s IPO.

By sector, industrials led 2025 IPO proceeds with 34% of the total, driven largely by Flynas (USD 1.1 billion). Real estate ranked second with 19.2% from seven IPOs, including Umm Al Qura and Dar Al Majed. Healthcare contributed 7.8% through three IPOs—SMC Hospitals on Tadawul, Basma Adeem, and Wajd Life Trading on Nomu. Consumer non-cyclicals accounted for 7.6%, consumer cyclicals for 4.6%, and financial services for 12%. Energy represented 7.9%, while technology contributed 2.8%.

The Middle East bond market continued to grow robustly in 2026, with Saudi Arabia leading the region in bond issuance. As of March 2026, the bond market reached USD 1.5 trillion, with 30.1% of Middle East countries’ bond market capitalization in sukuk, up from 19.2% in Q1 2025 and the rest in traditional bonds. Saudi Arabia accounted for almost 72.7% of the sukuk in the region (up from 67% in Q1 2025), followed by UAE with 13.2% (down from 19.8% in the same period last year), while other countries accounted for the remaining 14.1%.

Government bonds make up the largest share of the Middle East market portfolio, corporate investment grade (hard currency). Quasi-sovereign, inflation-linked, and high-yield bonds comprise smaller portions of the total market value (Figure 6).

Among individual countries, Saudi Arabia commands the largest share of Middle East bonds at 39%, followed by Israel (19.3%) and the United Arab Emirates at 14.2%.

Alternative investments remain tiny in absolute terms. Private equity in the region has generally grown since 2019, with assets under management rising from USD 36.0 billion in Q4 2019 to USD 85.6 billion by Q1 2026 for our selected countries. This growth was fueled by both local and international investors, especially in the infrastructure and technology sectors.

The private credit market is harder to quantify due to limited data, but companies increasingly use private debt for financing. By Q1 2026, the private debt market reached an estimated USD 2.4 billion, more than double its 2019 size, driven mainly by sovereign wealth funds and family offices.

The GCC Investment Proposition

The Middle East has emerged as a formidable force in global investment markets, demonstrating remarkable advancement across multiple sectors. The region delivered robust IPO activity and accelerated the growth of bond and alternative investment markets. Despite enduring challenges such as limited market float and regulatory hurdles, the relentless pursuit of economic reforms and visionary strategic initiatives are driving transformational change and unlocking unprecedented opportunities. For investors, the Middle East stands as a dynamic powerhouse with immense long-term potential, offering a rapidly evolving landscape that demands attention and promises significant rewards for those who engage with its trajectory.

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