UAE stock markets shed billions amid regional conflict

Stock markets in the United Arab Emirates have suffered sharp losses since the outbreak of the US-Israel conflict with Iran, wiping out an estimated $120bn in market value and placing the country among the most affected globally.

Al Jazeera reported how Dubai’s main index has fallen by roughly 16 per cent since the hostilities began on 28 February, while Abu Dhabi’s benchmark has declined by around 9 per cent. In monetary terms, this equates to a loss of approximately $45bn from Dubai’s market capitalisation and a further $75bn from Abu Dhabi’s.

Elsewhere in the Gulf, the downturn has been less severe. Markets in Qatar and Bahrain have recorded declines of about 4 per cent and 7 per cent respectively, while Saudi Arabia and Oman have managed to post gains during the same period. In the United States, the S&P 500 has dropped by around 7 per cent, reflecting broader uncertainty linked to the conflict.

Although the UAE has been relatively insulated from the global energy disruption caused by Iran’s restriction of traffic through the Strait of Hormuz, the crisis has significantly impacted its position as a major international travel hub. Flight cancellations have surged, particularly on routes serving Dubai International Airport, the busiest airport in the world for international passengers.

Tourism remains a vital pillar of the UAE economy, contributing roughly $70bn last year — about 13 per cent of gross domestic product. The disruption to travel has therefore added to economic concerns, alongside weakening investor sentiment.

Despite the recent volatility, analysts suggest the downturn is unlikely to have lasting structural consequences. Haytham Aoun, assistant professor of finance at the American University in Dubai, described the situation as a temporary shock rather than a fundamental threat to the country’s economic ambitions.

He noted that while declining markets may dent confidence in the short term, global financial centres are ultimately judged by their resilience, regulatory strength and ability to maintain operations during periods of instability.

The UAE has invested heavily in developing its financial sector as part of a broader diversification strategy. In 2024, the total value of listed companies in the country surpassed $1tn for the first time, second only to Saudi Arabia within the region.

Dubai has also climbed to seventh place in the latest Global Financial Centres Index, marking its highest ranking to date. Under a long-term economic plan unveiled in 2023, the emirate aims to become one of the world’s top four financial hubs by 2033.

Burdin Hickok, a professor at New York University’s School of Professional Studies, said markets in both Dubai and Abu Dhabi were likely to recover strongly once the conflict subsides.

He argued that the underlying appeal of the UAE’s financial markets remains intact, with no significant changes to regulation or capital flows that might undermine long-term growth.

For now, however, the ongoing conflict continues to weigh on regional markets, leaving investors cautious as geopolitical tensions persist.