Executive Summary
The S&P GCC index declined by 1.5% in 2025, while Kuwait’s equity market rose by 21.0%, emerging as one of the top performers in the region alongside Oman (+28.2%) and Dubai (+17.2%), supported by broad-based gains led by banks and telecom stocks. Large banks such as National Bank of Kuwait and Kuwait Finance House delivered returns of over 20% during the year, reflecting solid earnings and resilient balance sheets. As we step into 2026, this report presents our outlook for Kuwait’s equity market using a three-factor framework encompassing economic fundamentals, earnings growth potential, and valuation attractiveness. While Kuwait’s macro backdrop remains supportive, driven by improving real GDP growth, low inflation, and reform momentum, widening fiscal deficits amid lower oil prices weigh on the outlook. Corporate earnings are forecasted to grow by a moderate 5.0% in 2026 following a strong recent performance, while elevated valuations after the 2025 rally limit the scope for further multiple expansion, although healthy dividend yields provide support. Overall, our outlook for Kuwait’s equity market in 2026 is neutral, with financials and telecom expected to underpin performance, partially offset by a softer outlook for real estate.
