Categories: Economy

Iran War Wipes $120bn Off Dubai, Abu Dhabi Stock Markets

The financial markets of the United Arab Emirates have emerged as some of the heaviest casualties in the ongoing conflict between the US-Israel alliance and Iran, with Dubai and Abu Dhabi losing a combined $120 billion in market value since hostilities began.

Since the launch of the US-Israel military campaign against Iran on February 28, the Dubai Financial Market (DFM) General Index has plunged approximately 16%, erasing about $45 billion in market capitalization. Concurrently, the larger Abu Dhabi Securities Exchange (ADX) General Index has dropped 9%, shedding roughly $75 billion. This decline places the UAE’s bourses among the most severely impacted globally.

The conflict has sent ripples across the region, with mixed results for neighboring markets. Qatar and Bahrain have seen their stock exchanges fall by about 4% and 7%, respectively. In contrast, Saudi Arabia and Oman have recorded gains over the same period. The volatility has not been confined to the Gulf; on Wall Street, the benchmark S&P 500 has dipped by roughly 7%, reflecting investor uncertainty fueled by conflicting signals from US President Donald Trump regarding the war’s scope and duration.

A Blow to Aviation and Investor Confidence

While the UAE is less exposed to the direct energy shocks stemming from Iran’s effective closure of the Strait of Hormuz than its hydrocarbon-reliant neighbors, the conflict has significantly undermined its status as a regional travel and tourism hub. The war has led to the cancellation of tens of thousands of flights, with a substantial portion operating through Dubai International Airport, the world’s busiest for international passengers. This sector is a cornerstone of the UAE economy; tourism and travel contributed an estimated $70 billion to the national GDP last year, accounting for 13% of the total economic output, according to state media.

Analysts note that while the market slide poses a short-term challenge to the UAE’s ambitions of becoming a premier global financial center, it does not represent a fundamental structural crisis. Haytham Aoun, an assistant professor of finance at the American University in Dubai, characterized the downturn as a “temporary shock” to investor sentiment rather than evidence of long-term economic damage.

“International financial centers are judged not only by market performance during crises but also by the quality of regulation, liquidity management, institutional resilience, and operational continuity,” Aoun told Al Jazeera.

Long-Term Ambitions Amid Short-Term Volatility

The UAE has invested heavily in its financial services sector as part of a broader economic diversification strategy, successfully elevating its capital markets to a leading position in the Middle East. In 2024, the total value of UAE-listed securities surpassed $1 trillion for the first time, second only to Saudi Arabia’s $2.5 trillion regional market.

This progress has been recognized internationally. In the latest Global Financial Centres Index, released last week by Z/Yen Partners in collaboration with the China Development Institute, Dubai rose to seventh place in global competitiveness—its highest-ever ranking. This momentum is part of a broader strategic vision; a 10-year economic plan unveiled in 2023 aims to establish Dubai among the world’s top four global financial hubs by 2033.

Echoing the sentiment of short-term turbulence, Burdin Hickok, a professor at New York University’s School of Professional Studies and a former Middle East specialist with the US Department of State, suggested that a resolution to the conflict could trigger a strong recovery.

“From a long-term perspective, I don’t see this volatility as exceptional,” Hickok told Al Jazeera. “The fundamental attractiveness of both stock markets is not changing, meaning regulatory or capital restrictions, which would be a more fundamental change.”

For now, the Dubai and Abu Dhabi exchanges remain under pressure, their performance a stark indicator of how regional geopolitical instability can swiftly impact even the most diversified and resilient economies in the Gulf.