GCC Market Snapshot

GCC markets had a strong bull run in 2021 with the S&P GCC total return index gaining 35% during the year led by positive sentiments from the reopening of economies and COVID-19 vaccination rollout. The rally was also supported by strength in crude oil, with Brent increasing 50% during the year and closing at USD 78/bbl. Not surprisingly, CDS spreads in the region remained low during the year with the exception of Bahrain, which increased toward the latter part of FY21. Abu Dhabi was the best performing market, rallying 75% during the year on high turnover. The outperformance of a few stocks had a particularly positive impact on the ADSM index. Nevertheless, all other GCC markets also delivered strong double digit returns, with KSA and Dubai benchmarks returning 33% and 32% respectively.

Index Returns in 2021 (%)

Brent Price (USD/bbl)

CDS Spreads (2018–2021)

GCC Average Daily Turnover (USD mn)

The IPO market also gained traction, particularly in 2H21, with multiple IPOs and successful listings in KSA (both main and Nomu market) and Abu Dhabi. High commodity prices and accompanying inflation, supply chain disruptions, and a resurgence in demand as economies began opening up were the key themes driving stocks and broader markets.

While 2021 ended on a high note, market volatility increased toward year-end as markets braced for a hawkish Fed stance and subsequent tightening. Looking ahead, oil remains strong on the continuation of an OPEC+ agreement on a gradual production increase at a time when demand side dynamics remain favorable. This should give reasonable fiscal room for GCC governments to continue stimulating their economies. Accordingly, GCC markets will remain in a relatively better position than many of their global peers.

More IPOs across the region are expected to capitalize on this window of opportunity in 2022. While overall equity returns may not match FY21 levels, GCC markets are likely to provide interesting investment opportunities for active investors to generate alpha.