The GCC ETF market ended the first half of 2026 with more products, more themes, and more visible investor interest, even as performance remained highly uneven.
Q1 was shaped by geopolitical tension, war-related risk, oil volatility, and a sharp split between oil-linked winners and growth-market laggards. Q2 then brought a different kind of catalyst: high-profile ETF launches, a global AI and quantum policy push, the SpaceX IPO, new Shariah-compliant income products, and a major technical break in gold as prices slipped below the key $4,000 support area.
Three launches stood out in Q2: AGIX, the KraneShares public-private AI and technology ETF; KWIN, a Shariah-compliant alternative income ETF; and GCCDIV, Lunate’s first-of-its-kind GCC Shariah dividend ETF. Together, they showed that the local ETF shelf is moving beyond plain country exposure into private-market access, option-income strategies, and regional equity income.
The GCC ETF market expanded, but performance was selective. Quantum computing, AI infrastructure, Japan, Turkey, Egypt, Pakistan, and selected U.S. equity exposures performed well. China, Hong Kong, India, and some commodity-linked themes struggled.
Market Snapshot: More Products, Concentrated Assets
The GCC-listed and GCC-accessible ETF universe continued to broaden in the first half of 2026, but assets remained highly concentrated.
Total available AUM across the tracked universe stood at around $8.85 billion. The top five products accounted for nearly 87% of that figure, while the top ten accounted for more than 93%. That concentration was led by large international and cross-listed products such as KraneShares CSI China Internet ETF, Albilad CSOP MSCI Hong Kong China ETF, KraneShares Public-Private AI & Technology ETF, SAB Invest Hang Seng Hong Kong ETF, and Alinma Saudi Government Sukuk ETF.
Still, the market is no longer standing still. The universe grew from 39 ETFs in Q1 to 42 by the end of H1, with three Q2 launches adding AI, Shariah alternative income, and Shariah GCC dividend exposure. Trading interest also continued to build, particularly on ADX, where ETF activity has become one of the clearest signs of rising investor engagement with the wrapper.
The market therefore looks stable at the aggregate level, but the underlying behavior was anything but broad-based. Returns were driven by specific exposures, while flows were shaped by a small number of large movements.
Winners: Quantum, Japan, Turkey and AI Infrastructure Lead
The strongest H1 performer was the Boreas Solactive Quantum Computing UCITS ETF, which rose 32.99% year-to-date. That made quantum computing the standout listed theme in the GCC ETF universe. In June, the U.S. administration moved to accelerate quantum development through new executive orders, adding policy momentum to a theme that was already attracting investor attention globally. For GCC investors, QUANTM became one of the clearest local ways to express that theme through an exchange-listed product.
It was followed by Chimera S&P Japan UCITS ETF, up 24.98%, and Chimera S&P Turkey Shariah ETF, up 23.83%. The performance of Japan and Turkey shows how country exposure can still create meaningful return dispersion inside a market often dominated by GCC, U.S., and China-linked products.
AI infrastructure also remained one of the strongest themes. The Boreas S&P AI Data Power & Infrastructure UCITS ETF rose 19.11%, while Albilad MSCI US Equity ETF gained 18.43%. Egypt also stood out, with the EGX 30 Index ETF up 17.23%, helped by stronger local equity momentum and improved investor appetite toward Egyptian risk and the best performance of the Egyptian Pound in years.
Investors were rewarded for selective exposure. The best-performing ETFs were tied to themes or regions where the market could still see structural demand, policy support, recovery momentum, or strong earnings exposure.
Laggards: China, India and Gold Lose Momentum
The Chimera S&P China HK Shariah ETF fell 30.45% year-to-date, while KraneShares CSI China Internet ETF declined 29.95%. The weakness reflects continued pressure on China internet and China/Hong Kong equity exposure, where policy uncertainty, weaker growth confidence, and investor positioning remained difficult.
The Albilad CSOP MSCI Hong Kong China ETF fell 13.15%, while the SAB Invest Hang Seng Hong Kong ETF declined 8.55%. India also struggled, with the Chimera S&P India Shariah ETF down 14.53%.
Gold was another important underperforming theme by the end of H1. The Albilad Gold ETF still attracted the strongest YTD inflows in the tracker, but price momentum weakened sharply in Q2 as gold broke below the key $4,000 support area.
Other thematic exposures also struggled. Carbon-related strategies remained under pressure for much of the period, while China-linked Shariah exposure was the weakest part of the Shariah universe. The broader message is that H1 was not simply a “risk-on” or “risk-off” market. Some themes worked very well, but others exposed investors to concentrated country, commodity, or policy risk.
Thematic ETFs: Quantum Leads as more ETFs Debut
QUANTM was the standout performer, gaining nearly 33% year-to-date, while AIPOWR rose more than 19% as investors continued to seek exposure to AI infrastructure, data centers, power demand, chips, and next-generation computing.
The bigger development was product depth. In Q2, the GCC ETF market added three important thematic products: AGIX, KWIN, and GCCDIV. Two of them were Shariah-compliant, reinforcing how the regional ETF market is being built around both global themes and Islamic finance use cases.
AGIX brought public-private AI exposure to ADX, including exposure to companies such as SpaceX and Anthropic. KWIN introduced a Shariah-compliant option-income strategy, expanding the income toolkit beyond sukuk and dividends. GCCDIV added dedicated GCC Shariah dividend exposure.
Together, these launches show that the GCC ETF market is moving beyond country trackers into more specific portfolio tools: AI, private-market access, option income, and regional Shariah dividends.
The key point is that the GCC ETF platform is becoming a way to express very specific investment views. That is a positive development for the market, but it also means investors need to understand what sits inside each ticker.
How GCC ETFs Performed During the U.S.-Iran Conflict
Regional ETF performance was mixed during the conflict period, but the damage was contained. UAE equity ETFs were among the more resilient local exposures, with several posting positive June returns despite geopolitical pressure.
Qatar ETFs were softer during the month but remained positive year-to-date, while Saudi exposure was more mixed, with some equity ETFs still positive for the year and sukuk ETFs holding up defensively. Overall, the local GCC ETF shelf showed resilience, but performance remained selective across UAE, Saudi, and Qatar products.
Flows and Trading: Impact of war but opportunities remain
Flows and volumes were modest during the second quarter of the year
Average ETF trading volumes moderated during the second quarter compared with the first quarter. Across all GCC-listed ETFs, the six-month average daily trading volume stood at 872,661 shares, while the second-quarter average declined to 601,972 shares. Despite the broader slowdown, several ETFs recorded stronger trading activity, including the Alinma Saudi Government Sukuk ETF, Lunate's Quantum ETF, and Lunate's China HK Shariah ETF. GCC-listed ETFs offering U.S. equity exposure also experienced increased investor interest during the quarter. Conversely, the Albilad Gold ETF and Lunate's S&P UAE Shariah ETF recorded the largest declines in trading volumes. The overall moderation in activity likely reflected heightened investor caution amid geopolitical tensions following the Iran conflict, which weighed on trading across regional markets.
Average Volumes Declined in Q2
Across the tracked GCC ETF universe, YTD flows were around -$16.1 million. One-month flows were weaker at around -$41.7 million, mainly due to outflows from China/Hong Kong-linked exposure.
The largest YTD inflow came from Albilad Gold ETF, which attracted around $30 million. That shows regional investors continued to use gold ETFs as a portfolio hedge, even though gold’s price momentum weakened into the end of the half.
The largest outflow came from Albilad CSOP MSCI Hong Kong China ETF, with roughly $38.4 million in YTD outflows and $38.7 million in one-month outflows. That confirms the broader message from performance: China/Hong Kong exposure was both a return drag and a flow drag.
Income: Sukuk, Qatar, KWIN and GCCDIV Expand the Toolkit
Income remained one of the clearest opportunities in the GCC ETF market, but the category is becoming more diverse.
The market already had sukuk, bond, Qatar equity income, and regional equity yield exposure. H1 added two important new angles: KWIN, an option-income Shariah strategy, and GCCDIV, a GCC Shariah dividend ETF.
That is important because income in Shariah portfolios has historically been harder to build. Investors often had to rely on sukuk, individual dividend stocks, or cash-like instruments. The new launches give the ETF market more ways to package income inside listed, diversified products.
The key point is that the GCC ETF shelf is starting to move from simple exposure toward portfolio use cases: income, hedging, thematic access, and diversification.
GCC-Listed Shariah ETFs: Two More ETFs join ADX
The launch of KWIN and GCCDIV further expanded the range of Shariah-compliant ETFs listed on the Abu Dhabi Securities Exchange, reinforcing Lunate's position as one of the world's largest issuers of Islamic ETFs by number of products. It also strengthens ADX's standing as one of the leading exchanges globally for Shariah-compliant ETF listings, offering investors one of the broadest selections of Islamic investment solutions.
Both funds are particularly significant as they introduce innovative income strategies to the Islamic investment universe. KWIN is the world's first Shariah-compliant option income ETF, designed to generate income while targeting returns comparable to U.S. risk-free rates. Meanwhile, the Lunate Solactive GCC Shariah Dividend ETF (GCCDIV) is the first ETF globally to provide diversified exposure to high-dividend GCC equities, with an indicative dividend yield of approximately 6.7% higher than many emerging market dividend equity funds and comparable to yields available in several emerging market debt strategies.
Now the number of GCC listed Shariah funds grows to 25 with more than $2.19 billion in assets. Equity dominates by product count and assets, with 21 products and about $1.77 billion in available AUM. Fixed income and sukuk account for three products and roughly $365 million, while gold is represented by Albilad Gold ETF, with around $60 million in available assets.
TURKI was one of the best shariah performing funds in the GCC in H1, while CHHK was one of the weakest. Geography, sector exposure, valuation, liquidity, and index construction still matter.
GCC Capital Markets and ETFs Remain Resilient
The first half of 2026 demonstrated the resilience of GCC capital markets and the continued evolution of the region's ETF industry. Despite geopolitical tensions, heightened market volatility, fluctuating oil prices, and shifting global investment trends, the ETF market continued to grow. The launch of AGIX, KWIN, and GCCDIV further broadened the investment opportunities available to regional investors and highlighted the increasing pace of product innovation.
While the market has made significant progress, challenges remain. Assets and trading activity continue to be concentrated in a handful of funds, liquidity varies considerably across products, and greater investor education and market-making support will be essential to drive broader adoption.
Looking ahead, the second half of 2026 will be an important test for the industry. Can the recent wave of ETF launches translate into stronger liquidity and sustained investor inflows? Will Quantum ETFs continue to outperform AI-focused strategies? Can GCC equities, China, and gold ETFs regain momentum? As new issuers enter the market and exchanges continue expanding their ETF offerings, the foundations are being laid for a deeper, more diversified, and more mature ETF ecosystem across the GCC.
