EFG Hermes Identifies Winning Sectors Across Regional Markets in 2026
EFG Hermes has released its annual outlook report, “The Year Ahead 2026: At a Turning Point,” highlighting the most attractive investment opportunities across Middle East and North Africa (MENA) markets for the year ahead. The report underscores infrastructure, financial services, real estate, and domestically driven growth stocks as key pillars for sustainable returns in 2026.
According to the report, the region’s significant demographic expansion positions infrastructure stocks as a strategic hedge against softer oil prices and tighter fiscal budgets. In Saudi Arabia, East Pipes stands out as a beneficiary of rising investment in water and oil and gas projects, while Electrical Industries offers an attractive entry point into the energy sector at competitive valuations. ADES continues to draw investor interest following its recent acquisition of Shelf Drilling. Logistics and transportation stocks are also gaining momentum, led by AD Ports amid accelerated asset monetization and new growth initiatives, while ADNOC L&S and ADNOC Gas are positioned to benefit from higher shipping rates and stronger domestic gas demand.
The financial sector remains a core growth engine across the region. EFG Hermes expects credit growth to continue in UAE and Egyptian banks, with loan expansion and fee income helping offset potential pressure on net interest margins following rate cuts. In the UAE, ADCB is viewed favorably on the back of solid loan growth prospects and the strength gained from its recent capital increase. In Egypt, Commercial International Bank (COMI) and Credit Agricole Egypt are expected to be among the main beneficiaries of an upward credit cycle and higher dividend yields. In Saudi Arabia, Al Rajhi Bank maintains a strong edge due to its large, stable asset base and extensive retail network, while Saudi National Bank (SNB) relies on operational discipline and optimization of risk-weighted assets.
In real estate, the report emphasizes diversification as a critical strategy to navigate shifting market cycles. In the UAE, Emaar Properties remains the preferred pick thanks to attractive dividend yields and clear cash flow visibility. In Egypt, Talaat Moustafa Group (TMG) offers exposure to a growing property market, supported by diversification into hospitality and regional expansion. In Saudi Arabia, Retal Urban Development benefits from adjustments to foreign ownership limits, while Jabal Omar Development strengthens its position in religious tourism with a clean balance sheet. Kuwait also presents opportunities through Mabanee, which stands to gain from Saudi retail growth and positive trends in the residential property market.
Stocks linked to domestic demand are highlighted as additional growth drivers. In telecommunications, Mobily in Saudi Arabia and du in the UAE offer solid earnings growth alongside attractive yields. On the consumer side, Spinneys benefits from resilient consumer spending in the UAE, while EDITA presents a recovery play in Egypt following previous margin pressure. GB Corp is positioned to capitalize on a rebound in the automotive sector and rising demand for credit. In Saudi Arabia, Almarai is expected to gain from improved pricing flexibility. Healthcare also features prominently, with Ibnsina Pharma in Egypt and Saudi German Health (SMC) in Saudi Arabia benefiting from recovering demand and improved hospital profitability.
EFG Hermes concluded that these themes reflect the underlying resilience of regional markets and the availability of sustainable growth opportunities. The report stresses that diversification across infrastructure, financial services, and real estate, alongside exposure to rising domestic demand, will be essential to achieving stable returns and long-term growth in 2026.