Welcome to the March edition of Middle East Investment Nabd, a newsletter from Institutional Investor.

As a reminder to our non Arabic speakers, nabd means “pulse.” This month, that pulse has been well and truly tested.

The escalation following US and Israeli strikes on Iran has delivered a real time stress test for Gulf financial markets. Yet rather than broad instability, what has emerged is something more nuanced: measured stability in some markets, strain in others, and clear differentiation beneath the surface. This edition examines what recent volatility reveals about resilience, liquidity, and allocator positioning across the region. It delves into both public markets, and private markets from a trading and asset allocation perspective.

At Institutional Investor, we remain deeply committed to the Middle East region. Its markets continue to evolve in sophistication, scale, and global relevance, and we are committed to covering the capital flows, policy shifts, and allocator decisions shaping its trajectory. Periods of volatility do not diminish that conviction. If anything, they reinforce the importance of rigorous reporting and informed dialogue.

In Why Gulf Markets Haven’t Reacted — Yet , Jivraj explores why equity and credit markets have remained more orderly than many expected.

Investors describe a market that is adjusting rather than capitulating. “Valuations play a role,” said Akber Khan of Al Rayan Investment, noting that Saudi equities entered the conflict from more defensive levels. Salah Shamma of Templeton Global pointed to “rotation into sectors where prices may increase, such as materials and energy,” even as investors move away from tourism and real estate exposure.

Credit markets tell a similar story. Spreads have widened to reflect higher risk perceptions but remain below pandemic highs. Bashar Al Natoor of Fitch Ratings noted that “historically, GCC debt capital markets have rebounded relatively quickly following periods of heightened geopolitical tension,” while cautioning that the trajectory will depend on how developments evolve.

The message is measured but clear. Stability is holding, for now. Duration remains the defining variable.

Read Hassan Jivraj’s full analysis here.

If our first story is about stability, the second is about differentiation. 

In Middle East Markets Diverge Under Pressure, Laurie McAughtry examines trading data showing that volatility is not being absorbed evenly across the region.

“When markets are stressed, what really matters is not whether volatility rises, it always does, but whether liquidity stays accessible,” said Matt McLoughlin, former head of trading at Liontrust. “That’s where you see which venues have truly matured.”

Saudi Arabia and Israel have sustained higher volumes and activity even as volatility climbed. In Saudi, both notional trade and average trade size rose during the escalation, suggesting institutional confidence in market depth. “You’re seeing enough confidence in market structure and liquidity that big trades are still getting done,” McLoughlin observed.

Elsewhere, smaller venues saw liquidity thin more quickly. As Nazed Mannan of BMLL noted, “In smaller markets, even modest shifts in participation can translate into large percentage moves.”

For buy side traders and allocators, the takeaway is structural. The Middle East is no longer a single risk bucket. It is a differentiated landscape where liquidity depth, participation, and infrastructure meaningfully shape risk outcomes.

Read Laurie McAughtry’s full story here.

Allocator behaviour is evolving alongside market structure. In Kuwait’s ‘Wealth Engineers’ Seek Defensive Growth Amid Volatility, John Crabb reports that some of Kuwait’s most influential investors are leaning into defence without retreating from opportunity.

“We call ourselves wealth professionals, but we are wealth engineers,” said Asif Khan of Action Group Holdings. “We are constantly monitoring all of the investments and positions that we have, and whichever are at risk we take action on.”

Khan expects equities to remain volatile but sees promise in fixed income amid potential rate shifts. Private equity and real estate allocations are being selectively strengthened, while manager selection remains rigorous. “There is a manager selection process to decide who is correlating with my existing portfolio,” he said.

At Development Enterprises Holding, the tone is similarly deliberate. “Business in Kuwait won’t win you phenomenal returns like you get in other parts of the world,” said Mohammad Al Jouan, “but it will guarantee you value creation and steady growth.”

Across the Gulf, the posture is not reactive. It is engineered. Preserve flexibility. Protect capital. Deploy selectively.

In a volatile geopolitical landscape, that discipline may be the region’s strongest signal of resilience.

Read John Crabb’s full story here.