Stocks in Dubai and Abu Dhabi experienced significant declines on Wednesday as the markets reopened after a two-day closure, spurred by a series of Iranian drone and missile attacks on the United Arab Emirates. The Dubai benchmark index was seen trading down 4.9%, positioning it for its most challenging day since May 2022. Similarly, Abu Dhabi’s primary index was down more than 3%, indicating one of its sharpest intraday falls since August. The Nasdaq UAE 20 index also reported a decline of 4.3%.
Leading the downturn in Dubai was the state-owned bank Emirates NBD, which fell by 5.2%. In Abu Dhabi, Al Buhaira National Insurance Company and Umm Al Qaiwain General Investments witnessed even steeper losses, plummeting by 9.6% and 8.7%, respectively. Prior to the opening of both exchanges, officials announced temporary adjustments to their lower price limit thresholds for securities to prevent excessive volatility, setting the threshold at -5%.
The backdrop of these market reactions was a wave of attacks from Iran over the weekend, which the Iranian government claimed were retaliatory measures following U.S.-Israeli airstrikes that resulted in the death of Supreme Leader Ayatollah Ali Khamenei. The drone and missile strikes impacted various civilian and commercial zones across the UAE, causing damage to crucial infrastructure, including Dubai’s international airport, hotels, and Amazon data centers.
In the aftermath, the closure of airspace around the UAE led to extensive flight cancellations, with budget airline Air Arabia also experiencing a 5% drop in stock value. Analysts at Citi noted that the escalating conflict in the Middle East could have profound and enduring implications for the MENA region. They highlighted Dubai’s Emaar Properties and Abu Dhabi’s Aldar Properties as particularly vulnerable to declines in earnings-per-share growth due to the current instability. In the banking sector, National Bank of Kuwait and Emirates NBD were identified as facing considerable downside risks.
The analysts cautioned that the perceived equity risk premium associated with MENA stocks—especially those heavily held by foreign investors or perceived as overvalued—could rise sharply. While immediate revenue from real estate sales may not be significantly affected due to existing sales backlogs, a potential downturn in property prices and demand could lead to a drop in future sales and earnings.
This sell-off in the Gulf markets on Wednesday mirrored a broader trend of losses in stock indexes globally. Asian markets resumed their downward trajectory, while European stocks opened on a positive note, breaking a two-day losing streak. In the U.S., stock futures suggested a negative opening, reflecting a continuation of the downward trend observed in major averages during the previous day’s trading session.
