Markaz: Kuwait’s economic landscape demonstrated positive momentum, headlined by S&P upgrading the sovereign credit rating to AA-

Kuwait Financial Centre “Markaz” released its Monthly Market Review report for November 2025. Kuwait’s main equity index declined in November 2025 amid negative global sentiment and profit booking from investors. However, the decline was lower than most other GCC markets. Kuwait All Share Index declined by 1.9% in November, led by stocks in the Technology (-19.0%), Utilities (-7.7%), and Oil & Gas (-5.6%) sectors. Kuwait’s banking sector index declined by 2.1% for the month. Among banking stocks, index heavyweight National Bank of Kuwait declined by 4.5% for the month. Commercial Bank of Kuwait and Gulf Bank declined the most, falling by 9.5% and 5.5% respectively during the month. Gulf Bank announced its results for Q3 2025, with its net profit for 9 months declining 2.5% y/y to KD 32.4 million. Among sectors, Consumer Staples was the top gainers, rising by 21.4%, driven by performance of Mezzan Holding. Mezzan Holdings’ stock prices rallied after announcing its results for the first nine months of 2025, with net profits increasing by 20.6% y/y to KD 13.5 million. Jazeera Airways increased by 17.4% for the month following its results for the first nine months of 2025, with net profits increasing 60.3% y/y to KD 23.0 million.

Kuwait’s economic landscape demonstrated positive momentum in November, headlined by S&P upgrading the sovereign credit rating to AA- with a stable outlook, citing progress on fiscal reforms, the new financing law, and strong government asset positions despite persistent deficits and hydrocarbon reliance.  Domestic credit grew by a robust 7.5% YTD, driven by a surge in lending to financial institutions and a steady recovery in household and business credit, which offset declines in the oil and real estate sectors. Simultaneously, the non-oil private sector accelerated, with the PMI rising to 52.8, fueled by increased output, new orders, and the strongest business confidence since June, setting a solid foundation for the forecasted 2% economic growth through 2028.

All GCC equity indices, except Oman, ended the month on a negative note with S&P GCC composite index registering a decline of 7.4%. The S&P GCC Composite Index experienced a month-long decline in November 2025, falling consistently due to negative global sentiment, which led to broad-based losses across Saudi Arabia, Dubai, Abu Dhabi, Qatar, and Bahrain. This weakness was compounded by the Q3 2025 results from Saudi Aramco, which reported a 10% year-on-year revenue decline and a 2.2% fall in net income, driven by reduced crude prices (averaging $70/bbl) and lower sales volumes. However, the month witnessed two major structural announcements that provided long-term optimism. ADNOC unveiled a massive USD 150 billion investment strategy (2026-2030) to boost production capacity, and Saudi Arabia strengthened strategic ties with the US, resulting in USD 270 billion in bilateral deals focused on AI, technology, and a major expansion of the mining sector. Despite these economic diversification initiatives, profit-taking and weak oil market fundamentals dictated the short-term negative trajectory of the region's main indices. In contrast, The Muscat Stock Exchange (MSX) rose due to strong macroeconomic endorsement from the IMF's favorable economic outlook and continued high net buying by foreign investors.

The UAE's domestic credit growth reached a decade-high of 8.2% y/y in September, primarily propelled by a significant rebound in public sector credit growth to 5.2% y/y, despite a slight moderation in private sector credit, particularly in personal lending. Meanwhile, Saudi Arabia saw its GDP growth accelerate to 5% y/y in Q3 2025, the strongest since Q1 2023, largely fueled by a three-year high in oil sector growth at 8.2% y/y as production cuts unwound and robust non-oil growth at 4.5% y/y.

Global equity markets, as measured by the MSCI World Index, posted a marginal gain of 0.2% in November 2025, reflecting a month of mixed performance driven primarily by fluctuating sentiment around AI-related stocks and U.S. monetary policy expectations. The S&P 500 also saw a minimal increase of 0.1% in November, as persistent concerns over high stock valuations and the profitability of AI investments were largely offset by a late-month rally fueled by dovish Federal Reserve comments and hopes for a December rate cut. Performance diverged across major economies, with Japan rising 1.4% on the back of expectations of tighter policy by the Bank of Japan, while Emerging Markets (MSCI EM) declined by -2.5%. Chinese equities fell by 1.7%, mainly due to persistent concerns over lackluster domestic demand, and the impact of the global tech stock sell-off.

The yield on the 10-year US treasury notes declined by 9 bps during the month to 4.02%, primarily caused by increased investor expectations of a future Federal Reserve interest rate cut coupled with a flight-to-safety sentiment. Global economic uncertainty surrounding equity valuations and reports of poor economic performance in key international markets likely fostered a risk-off environment, prompting investors to move capital out of riskier assets like stocks and into the relative safety of US government debt.

Oil (Brent) prices closed the month at USD 63.02 per barrel, declining by 2.9% during the month, its fourth straight monthly decline. This was primarily driven by persistent concerns over excess global supply combined with the US' move to push an aggressive peace proposal between Russia and Ukraine, which the market interpreted as a step toward resolving the nearly four-year-long conflict. This led to the belief of an effective increase in available global supply and the reduction of the geopolitical risk premium attached to oil prices.

The key driver for market movements in December will be the highly anticipated Federal Reserve meeting, where clarity on the interest rate trajectory will be sought, especially given the increased expectations for a rate cut following recent dovish commentary. This will be complicated by the release of a backlog of U.S. economic data delayed by the government shutdown, which could introduce further volatility in the markets. For the GCC markets, the focus should ideally shift to domestic fundamentals and oil price movements, as the overhang of the negative global sentiment and profit booking from investor minimizes.