Secondary market liquidity the new chapter for GCC bourses

Gulf Cooperation Council stock exchanges are entering a new stage of development as successive years of reform edge the region’s bourses higher in the global rankings of significant capital raising hubs. This was the message the seven bourses delivered to the 300+ institutional investors and 100+ corporates that attended HSBC’s GCC Exchanges London Conference in London 16-19 June.

Following years dominated by government privatisation programmes and an uptick in private sector IPOs, Gulf bourses are turning their attention to improving secondary market liquidity. The aim, they said, is to boost global index weightings and provide both local and international investors with greater trading opportunities and tools.

By the end of 2024, for example, the Abu Dhabi Securities Exchange and Dubai Financial Market had achieved a combined trading turnover to stock market capitalisation ratio of 9.7 per cent1,2. While this is still well below the heights of the world’s busiest exchanges such as the New York Stock Exchange and Hong Kong Stock Exchange, which respectively achieved ratios of 104 per cent and 71 per cent the same month, it demonstrates the growth potential^1,2.

An increasing number of larger secondary market offerings are a natural next step towards larger free floats and higher trading levels. And during the first quarter of 2025, ADX was responsible for the world’s seventh largest follow-on of the period - a $2.84bn sell down in ADNOC Gas^3,4,5.

The divestment not only increased the company’s free float from 4 to 9 per cent but also enabled it to secure promotion to MSCI’s Emerging Market Index - a key driver for the growing number of secondary deals^5,6.

Enabling pre-IPO investors to make smooth exits, while allowing other investors to boost their positions, is another marker for growing depth and breadth.

This March, Saudi’s Taduwal exchange achieved just that when local venture capital investor Impact46 sold a $244mn stake in Rasan IT less than one year after the fintech’s IPO^7,8. The successful use of an accelerated book build format also helped to generate healthy interest across high quality investors.

New liquidity-enhancing products are gathering pace too. This includes exchange traded funds, with growing links between the Middle and Asia prompting ETF listings of each other’s stocks.

Saudi Arabia’s Capital Markets Authority is currently working on draft rules to facilitate further cross-border products such as depositary receipts in addition to providing domestic issuers with more capital raising channels and attracting more high-frequency trading firms⁹.

Mohammed Al-Rumaih, chief executive officer of Saudi Exchange told GCC Exchanges Conference attendees that it remains “committed to enabling access, enhancing market infrastructure, and fostering transparency to support diversified capital formation across sectors.”

Broader and deeper equity markets are drawing growing interest from global investors, driven by these structural reforms, improving liquidity, and expanding product offerings.

ADX group CEO Abdulla Salem Alnuaimi highlighted its growing role as a primary gateway for global capital flows into the country. “In the first five months of 2025 alone, next foreign investment in ADX reached around $3bn, representing a 78 per cent increase compared to the same period in 2024,” he noted. “Foreign trading values have surged by more than 347 per cent over the past five years.”

According to an HSBC report exploring Dubai’s capital market growth, published earlier this year, 85 per cent of the 138,262 investors who registered on DFM in 2024 were foreign - a trend that has continued into this year¹⁰. The internationalisation of the DFM is also reflected in its trading data, with foreign investors accounting for more than half of trading activity at the end of 2024.¹¹.

Speaking at the Conference, Hamed Ali, CEO of DFM and Nasdaq Dubai, said: “Dubai’s capital markets are gaining increasing global prominence, reflecting growing investor confidence in the emirate’s economic stability and long-term growth trajectory.”

In 2023, HSBC also facilitated DFM’s first international securities lending and borrowing transaction, providing investors with another crucial trading tool¹². Some of the GCC’s smaller exchanges are keen to follow suit.

The Muscat Stock Exchange is exploring SLB and market making to increase liquidity and achieve MSCI Emerging Market status¹³.

CEO Haitham Salim Al Salmi also said that MSX is “working with the Oman Investment Authority and the government to pave the way for sizable and profitable private companies as part of their divestment plan.”

Meanwhile Boursa Kuwait is rolling out a central counterparty framework to enhance post-trade efficiency¹⁴. Its head of markets, Noura Al-Abdulkareem, said the overall strategy is to bolster “investor confidence and advance our vision of a sustainable market that aligns with evolving global trends.”

GCC exchanges are also working hard to encourage greater retail participation. In Bahrain, for example, an eIPO service is in the final stages of preparation¹⁵.

“We expect to launch this in the fourth quarter,” said Central Bank of Bahrain governor, Khalid Humaidan. “Streamlining investor access to IPOs helps to advance the digitalisation of our financial infrastructure and encourage broader financial participation.”

The exchanges also remain focused on providing smaller, high growth companies with access to capital.

Speaking at the London event, Abdullah Muhammad Al Ansari, CEO of Qatar Stock Exchange, highlighted the efforts underway to advance the scale and scope of the Stock Exchange.
“At Qatar Stock Exchange, we remain focused on enhancing our market infrastructure and broadening access to sustainable investment opportunities that support both regional growth and investor diversification”

Less onerous listing requirements are a key attraction of junior equities markets. On the main markets, regulators are prioritising higher governance to align with best global practice and sustainability targets.

HSBC Global Research analysts, speaking at the London event, noted that GCC markets remain under-owned by foreign investors. Only about 60 per cent of GEM fund managers currently hold Saudi and UAE equities¹⁶.

This is partly because just 10 per cent of stocks in the FTSE GCC indices have average daily trading volumes above $20mn¹⁷. The continued slew of government initiatives aims to change this.

As a result, HSBC forecasts a potential 3 percentage point increase in the region’s FTSE GCC weighing from 7 to 10 per cent by 2030¹⁸.

GCC exchanges remain optimistic about their role in facilitating international investment to support long term vision plans, even despite recent economic and geopolitical challenges. The pace of reform and opening up will continue.