Analysts predict ‘fewer but better’ Gulf IPOs in 2026

Gulf IPO activity cooled sharply in 2025 with 44 listings raising $6.0bn (the lowest annual total since 2020) versus $12.9bn in 2024, and several 2025 IPOs trading below their flotation price. Analysts expect fewer but higher‑quality listings in 2026 — potential deals include Dubai Investment Park, Oman India Fertiliser, and possible listings from Etihad and Binghatti — as investors become more selective, valuations tighten and the UAE is forecast to outperform regionally while Saudi activity may recover in H2 and Oman/Kuwait could benefit from reforms and privatisations.

Analysis

Market structure: Fewer IPOs in 2026 means winners will be high-quality issuers, large ECM banks, and liquid UAE large-caps; losers are marginal developers and small-cap issuers who priced for a seller’s market. Expect buyer pricing power—discounts to market multiples will be a gating factor and raise post-listing performance for conservatively priced deals within 6–12 months.

Risk assessment: Tail risks include a renewed Gulf conflict or a sudden sovereign bond sale that could compress foreign flows; probability low-to-moderate but impact high (10–25% equity sell-off). Near-term (days–weeks) volatility will spike around geopolitical headlines; medium-term (H1 2026) the IPO calendar and rate path drive flows; long-term (2026–27) a quality-driven re-rating in UAE banks and select privatizations is probable.

Trade implications: Tactical overweight in UAE large-cap banks and ECM-fee beneficiaries, and underweight speculative Dubai real-estate small caps, is warranted; use cost-limited option hedges into H1 2026. Pair trades that long ADX banks vs. short recent underperforming UAE IPOs should capture the quality premium; increase Saudi exposure only after H1 2026 stabilization.

Contrarian angle: Consensus underestimates scarcity premium—fewer listings can bid up high-quality secondary supply (10–20% upside potential for top-tier issuers). Historical parallels: post-2020 quiet windows produced concentrated rallies; unintended consequence: fee concentration to Big Banks (UBS, regional brokers) which benefits ECM franchises but raises systemic single-name liquidity risk.

Key Decisions for Investors

• Establish a 2–3% net long in Abu Dhabi banks: First Abu Dhabi Bank (FAB.AD) and ADCB.AD, split equally. Target +12% in 9 months; stop-loss -8%. Add on pullbacks >6%.
• Accumulate iShares MSCI Saudi Arabia ETF (KSA) to 1.5–2% of portfolio on dips >5% through H1 2026; overweight from July 2026 anticipating a second-half pickup. Take-profit +15% by Dec 2026 or trim if KSA rallies >18%.
• Buy a 1% position in UBS (UBS) to capture ECM/IPO fee upside into 2026; add a second tranche on a 6% pullback. Target +20% in 12 months, stop-loss -10%.
• Purchase a cost-limited geopolitical hedge: buy a 3-month put spread on KSA (buy 8–10% OTM put, sell 20% OTM put) sized to cover 2–3% portfolio exposure to Gulf equities; roll if premiums remain elevated into H1 2026.
• Pair trade (1.5% net): long UAE large-cap banks (FAB.AD) vs short a constructed basket (equal-weight) of 3–5 UAE 2025 IPOs trading below flotation (include names like Al Ramz Real Estate). Expect capture of 6–12% relative outperformance over 6–9 months; cover if the short basket rebounds >15%.