Emerging market fund managers see more potential in Gulf stocks

• Investing in UAE and Saudi shares
• Still below India, China and Brazil
• Banking and real estate dominate

Global emerging markets funds upped their investments in Saudi Arabian and UAE blue-chip stocks in 2025, targeting the countries’ financial services and real estate sectors.

Yet the number of funds invested in the Gulf remains far lower than in major emerging markets such as India, Brazil and China, so there seems scope for additional funds to allocate money to the region.

“Gulf markets should be a relative safe haven this year, with the only major risk a renewed Iran-Israel conflict,” said Ryan Lemand, founder and chief executive of Neovision Wealth Management in Abu Dhabi.

“China, India, Turkey all have issues. The only emerging market countries that do not have major issues are the Gulf. Most recommendations by investment banks for 2026 are for emerging markets, and the Gulf sits top of the pile.”

Dubai-based consultancy Iridium analysed the portfolios of 362 active global emerging market funds, which have about $544 billion in assets under management between them.

Of these funds, 65 percent owned UAE stocks at the end of 2025, up 5 percentage points year on year. On average, UAE stocks represent 1.4 percent of each fund’s total assets.

Sixty percent of the funds are invested in Saudi Arabia. That is up 2 percentage points versus 2024 and comes despite Riyadh’s stock index falling 13 percent last year to be among the worst performers worldwide.

Dubai’s benchmark, in contrast, rose 17 percent last year and is already up about 3 percent in 2026, reaching a 20-year peak.

In monetary terms, the emerging market funds bought an additional $1.9 billion of UAE and Saudi financial services stocks, mainly banks.

The funds also invested a further $535 billion in UAE energy stocks and $419 billion in Dubai and Abu Dhabi-listed real estate companies.

Kuwaiti bank stocks, which have soared ahead of the introduction of a long-awaited mortgage law, received fund inflows of $262 million.

In terms of individual companies, 38 percent of the funds own shares in Dubai market bellwether Emaar Properties, making it the most widely held Gulf stock. Also popular are Saudi National Bank (26 percent) and domestic rival Alrajhi Bank (28 percent).

Alrajhi made a net profit of SAR18.4 billion ($4.9 billion) in the nine months to September 30, up 30 percent year on year, while SNB’s nine-month profit rose 19 percent to SAR18.6 billion.

“In 2026, competition for global emerging market funds will intensify” across the Gulf, the Iridium report states.

In all, these funds are invested in 196 Gulf stocks, the report adds, although “incremental capital will continue to concentrate in a small leadership set”.

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