MENA Equity Markets: Structural Drivers Replace the Oil Cycle By Mohanad Yakout, Senior Markets Analyst, Scope Markets

Equity performance across the Middle East and North Africa is increasingly being determined by structural and policy-specific factors rather than movements in energy markets. Recent trading activity confirms that the region has entered a phase of divergence, where market behavior reflects domestic reforms, capital flow mechanics, and macro positioning rather than a common external driver.

In Saudi Arabia, equity strength is primarily the result of regulatory liberalization. The removal of foreign ownership restrictions lowers entry barriers, expands the investor base, and increases expected liquidity. This leads to anticipatory positioning by both active and passive investors, which in turn compresses risk premiums and supports higher market multiples.

As implementation approaches, we expect continued flow-driven volatility, with financials and other index-heavy sectors remaining the primary beneficiaries.

In the United Arab Emirates, market resilience is explained by the composition of listed equities rather than commodity exposure. A higher weighting toward real estate, utilities, services, and diversified holding companies reduces sensitivity to energy fundamentals.

At the same time, stronger governance standards and a consistent pipeline of listings improve transparency and depth, attracting longer-term institutional capital. As global interest rate expectations ease, borrowing conditions improve for capital-intensive sectors, reinforcing the equity uptrend even in a neutral energy environment.

Egypt’s market performance follows a different mechanism. Elevated inflation and currency pressures shift domestic capital away from cash and fixed income into equities as a store of value. This creates upward pressure on the index independent of near-term economic growth.

Foreign investors are simultaneously drawn by valuation differentials and reform momentum, leading to a gradual transfer of ownership from local to international hands. This dynamic supports liquidity but increases sensitivity to policy execution.

Looking ahead, market direction across MENA will depend less on external commodity cycles and more on reform delivery and earnings follow-through. If regulatory changes translate into sustained capital inflows and non-oil earnings growth, the current decoupling trend should persist through the remainder of the quarter.