As the fourth quarter of 2025 unfolds, financial and real estate sectors are poised to dominate the Gulf Cooperation Council (GCC) markets, according to industry analysts. Philip Philippides, CEO of Mashreq Capital, highlighted the resilience of Dubai’s commercial real estate and the robust fundamentals of regional banks as key drivers of growth. In contrast, the materials sector is expected to underperform due to weak operational momentum. Sector rotation is anticipated to favor defensive and reform-linked plays, particularly in financial services and real estate. GCC markets remain relatively insulated from global trade tensions, with diversified export profiles and strategic trade relationships providing a buffer against escalating global conflicts. Anticipated Federal Reserve rate cuts and synchronized global monetary easing are expected to positively impact GCC financial markets, easing financial conditions and stimulating consumption, investment, and asset valuations. GCC central banks, tied to the US dollar, will mirror Fed moves, transmitting rate cuts directly into local money markets. Lower rates are expected to boost consumer spending, SME investment, real estate activity, and tourism. In fixed income, sovereign and quasi-sovereign credits offer attractive carry and mid-duration opportunities, with expected spread compression and renewed global inflows enhancing credit profiles and reducing refinancing risk. Despite tight spreads and a strong year-to-date rally, low-single-digit returns are achievable in Q4, primarily driven by carry, with additional potential upside from anticipated Fed rate cuts. On the equity side, the oil price outlook is largely priced in, with Saudi Arabia’s underperformance reflecting subdued oil sentiment. However, double-digit earnings growth, attractive valuations, and ongoing diversification reforms across tourism, finance, and logistics sectors provide structural support to regional equity markets. Monetary easing will further enhance credit growth and equity performance. The divergence in performance across GCC markets is likely to persist, with Oman and Kuwait retaining upside potential due to their reform-driven narratives. Mena credit continues to offer value, with current index yields at approximately 5.5% providing a compelling carry proposition. The 5–10 year segment of sovereign and quasi-sovereign bonds from countries like Saudi Arabia, Turkey, Egypt, and Morocco presents strong total return potential. GCC sukuk issuance is expected to remain robust in Q4, with Saudi Arabia and the UAE leading the charge. Investor appetite for sustainability-linked sukuk (SLS) and digital sukuk is poised to accelerate, driven by global ESG mandates and net-zero commitments. The ESG sukuk market is expected to surpass $50 billion outstanding in 2025, with GCC issuers playing a leading role. A sustained and disorderly decline in oil prices could materially impact government revenues, leading to reduced spending and weaker sentiment around IPOs and project awards. However, the base case remains for stable oil prices, with Saudi Arabia’s leadership emphasizing flexibility in fiscal policy and a continued focus on infrastructure, mega events, and gas output expansion.