Fadi Qanso

Globally

Global stock markets continued their upward trend in May, demonstrating resilience despite geopolitical challenges and ongoing tensions in the Middle East. Investor sentiment remained strongly supported by robust corporate earnings, particularly in the technology sector, and strong demand for AI-related investments.

In fact, the gains were largely driven by companies operating in artificial intelligence infrastructure, which continued to attract significant investor interest.

Consequently, with most major global markets closing the month in positive territory, the rally widened, contributing to further gains in the MSCI World Index of over 15% over the past two months, marking one of its strongest two-month performances ever, following a 5% monthly increase in May. Wall Street stocks also closed the month with positive performance.

Meanwhile, crude oil prices remained highly volatile throughout the month. Prices declined towards the end of the month, as positive discussions about a ceasefire and signs of de-escalation in regional tensions helped ease concerns about supply disruptions, resulting in a 17% drop in oil prices by month's end.

Arabic

In contrast, Arab stock markets underperformed their global counterparts, largely due to the continued closure of the Strait of Hormuz and the ongoing negotiations between the United States and Iran, with both sides using this closure as leverage in their talks.

This uncertainty has impacted investor sentiment across the region, exacerbated by volatile crude oil prices. Consequently, Arab markets have experienced mixed performance, remaining in a wait-and-see mode.

The market capitalization of Arab stock markets reached approximately $4.417 trillion at the end of May, remaining relatively stable with a slight increase of about 0.3% compared to the end of April. This limited rise was primarily driven by an increase of approximately $27 billion in the market capitalization of the Abu Dhabi Securities Exchange, although this was offset by a significant decrease of about $22 billion in the market capitalization of the Saudi Stock Exchange.

Meanwhile, trading activity in Arab stock markets recorded a total trading value of $77.0 billion, a notable decrease of 26% compared to April, indicating a more cautious stance among investors. However, total trading volume saw a sharp increase of 83%, reaching 261.8 billion shares, driven by a rise of 146.0 billion shares in trading volume on the Iraq Stock Exchange.

It is worth noting that trading volume on the Iraq Stock Exchange constituted 74% of the total trading volume in Arab stock markets. At the same time, the total number of transactions decreased by 23.7% to 13.3 million. Conversely, it should be noted that most Arab stock exchanges experienced official holidays at the end of May, resulting in a reduction in the number of trading days. This factor contributed to the overall decline in market activity .

During May, the performance of Arab stock indices was generally negative, with the S&P Arab Composite Index declining moderately by 0.7% during the month, reflecting the decline witnessed in the markets, while the MSCI GCC Index recorded a decrease of 1.3%.

In this context, the Muscat Stock Exchange witnessed the largest decline among regional markets, registering a 7.3% drop due to profit-taking. The Abu Dhabi Securities Exchange and the Saudi Stock Exchange (Tadawul) also declined as the war continued for the third consecutive month, impacting the volatility of crude oil prices. Meanwhile, several markets showed positive performance, notably the Tunisian Stock Exchange, which reached a record high in May, achieving a 10.0% increase in its index during the month, making it the best-performing market in the Arab region in May. It was followed by the Damascus Securities Exchange and the Amman Stock Exchange .

Saudi Arabia

The Saudi stock market, which accounts for approximately 60% of the total market capitalization of Arab stock markets, recorded a marginal decline during May, with the general index falling slightly by 1.0% to close at 11,077.9 points. Although the market began the month with a positive performance, the negative performance was influenced by continued geopolitical tensions and speculation surrounding negotiations between the United States and Iran, prompting investors to adopt a more cautious approach.

Despite this decline, the Tadawul All Share Index (TASI) remained the second best performing market in the GCC countries since the beginning of the year, achieving gains of 5.6%.

At the sector level, performance was negative, with 13 out of 21 sectors closing in the red. The capital goods sector led the decliners, registering a 7.8% drop during the month, followed by the healthcare equipment and services and basic materials sectors, which fell by 6.6% and 4.6%, respectively.

In the energy sector, Aramco shares declined by 0.8% during the month. Despite Saudi Aramco reporting strong profits in May 2026, the company's shares showed slight weakness towards the end of the month, mainly attributed to lower oil prices and fluctuating global demand forecasts.

As for the winning sectors, the software and services index led the performance during May 2026, recording double-digit gains of 11.1%, followed by the food and beverage and utilities indices with returns of 8.0% and 7.9% respectively.

The month witnessed two activities in terms of initial public offerings in the Kingdom, represented by the listing of Dar Al Balad Business Solutions Company within the software and services sector, which raised $54.6 million, in addition to the announcement by Masqa Investment Company of its intention to proceed with an initial public offering .

Qatar and Tunisia

The Qatar Stock Exchange recorded marginal gains for the second consecutive month in May, with the QE Index closing at 10,555 points, marking a monthly increase of 0.6%. The QE All Share Index also rose by 0.8% during the month. This increase was primarily driven by strong performance in the banking and industrial sectors.

As for year-to-date performance, the two indices ended the month with mixed results, with the Qatar Stock Exchange index declining by 1.9%, while the Qatar Stock Exchange All Share Index rose by 1.3%. The monthly sectoral performance chart showed a majority of the sectors that were performing well during the month.

Among the top performing sectors, real estate, industry, and transportation led the way in May, posting notable gains of 5.0%, 1.8%, and 1.0%, respectively. The insurance sector saw the largest decline among sector indices, falling by 3.7%, followed by telecommunications and consumer goods and services, which dropped by 1.9% and 0.5%, respectively.

However, the industrial sector advanced during the month, driven primarily by the strong performance of both Investment Holding Group and Qatar Aluminum Manufacturing Company, whose share prices rose by 8.7% and 6.5%, respectively. Gulf Takaful Group's stock topped the monthly performance chart with gains of 22.4%, followed by Qatar and Oman Investment Company with gains of 9.9%.

It should be noted that the number of companies listed in Qatar is 54, distributed during the month between 30 companies that recorded monthly gains, and 22 companies that recorded monthly losses, while the performance of the remaining two listed companies remained relatively stable.

The Tunisian stock exchange achieved the strongest performance among Arab markets during May, with the TUNINDEX index rising by 10% to close the month at 17,669.8 points, recording the second highest gains since the beginning of the year among Arab markets at 31.4%.

This strong performance reflected improved investor confidence, underpinned by stronger corporate financial fundamentals and revenue growth across the majority of listed companies. Investor sentiment was further boosted by the robust performance of the TUNINDEX and TUNINDEX 20 indices, along with broad gains across most sectoral indices, indicating continued interest in Tunisian equities.

In addition, listed companies recorded a 4% year-on-year increase in total revenues during the first quarter of the year, reaching 6.4 billion Tunisian dinars compared to 6.2 billion Tunisian dinars in the corresponding period of 2025. Notably, 53 out of 71 listed companies that published their activity indicators recorded an increase in revenues compared to the same period of the previous year, which confirms the broad improvement in company performance.

At the sectoral level, 11 out of the 12 sectoral indices published by the Tunis Stock Exchange recorded positive performance at the close of the first quarter of 2026. The strongest gains were in the consumer services index, which rose by 21%, and the food and beverage index, which climbed by 19%. Conversely, the household goods and personal care index was the only sector to register a decline, falling by 1.9 % .

June forecast

Looking ahead to June, Arab markets are expected to remain on a cautious and volatile trajectory, as investors continue to be sensitive to geopolitical developments in the region and the course of negotiations related to the reopening of the Strait of Hormuz.

Market performance is likely to remain largely tied to crude oil price trends, a key driver of risk appetite, particularly in GCC markets. Should clearer signs of de-escalation or improved supply emerge, markets could regain some momentum, supported by a gradual return of liquidity after the holiday period and increased selectivity towards stocks with strong fundamentals.

Conversely, continued uncertainty may prompt investors to maintain defensive positions, favoring sectors less sensitive to oil price volatility and stocks with stable dividend payouts. Consequently, June is likely to see mixed performance across Arab markets, with selectivity and caution remaining the defining characteristics of investor activity .

(Prepared by: Fadi Qanso, Assistant Secretary General and Director of Research at the Arab Federation of Capital Markets, Economist and University Professor; Edited by: Shaimaa Hefzy)

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