UAE markets retreat as Saudi stocks climb

Equity markets in the United Arab Emirates ended lower as heightened geopolitical tensions in the Middle East unsettled investor sentiment, while Saudi Arabia’s main benchmark advanced on gains in select industrial and media stocks.

The Abu Dhabi Securities Exchange and the Dubai Financial Market declined during trading as investors reacted cautiously to developments linked to the regional conflict involving Iran, Israel and the United States. Market volatility followed a period in which authorities had temporarily halted trading on both exchanges to stabilise financial conditions and allow regulators and listed companies to assess potential economic impacts arising from the security situation.

Dubai’s benchmark index fell sharply during early trading before paring some losses later in the session. Shares of property developers, banks and transport firms were among the biggest drags on the index. Major companies such as Emaar Properties, Emirates NBD and Air Arabia registered declines as investors trimmed exposure to risk-sensitive sectors tied to tourism, aviation and real estate. The Dubai Financial Market General Index had dropped more than four per cent at the opening bell, reflecting the strongest fall in nearly two years as investors responded to geopolitical uncertainty.

Abu Dhabi’s benchmark index also slipped, weighed down by losses in banking and energy stocks. First Abu Dhabi Bank, one of the region’s largest lenders, along with energy and utilities firms including TAQA and Dana Gas, were among those contributing to the downward pressure on the index. Property developer Aldar Properties and logistics-related companies also faced selling pressure as investors recalibrated expectations for sectors linked to regional trade flows and infrastructure.

The sell-off came as trading resumed after a two-day suspension ordered by regulators amid the conflict. Authorities had temporarily closed the markets to prevent panic selling and to evaluate the potential impact of missile and drone attacks reported across parts of the Gulf region. The decision marked one of the rare instances when the UAE’s equity exchanges were shut outside periods of national mourning or major financial disruptions.

Officials from the UAE Capital Markets Authority stated that the suspension was a precautionary measure designed to safeguard market stability and investor confidence during an exceptional geopolitical situation. The regulator also urged listed companies to review financial and operational exposure to regional developments and to disclose any material information that could influence investors’ decisions.

Regional markets have displayed mixed reactions as investors weigh the implications of the conflict for energy supply, trade routes and economic growth. Oil prices have risen amid concerns over disruptions in shipping through the Strait of Hormuz, a key artery for global crude exports and liquefied natural gas shipments. Higher oil prices typically provide fiscal support for energy-exporting Gulf states, though heightened volatility often triggers short-term sell-offs in equity markets.

While UAE markets declined, Saudi Arabia’s Tadawul All Share Index moved in the opposite direction, closing about 1.20 per cent higher. Gains were driven by strong performances in mid-cap industrial and media stocks, including Alujain Corporation and Saudi Research and Media Group, both of which climbed close to 10 per cent during the session. Their advance reflected renewed interest from investors seeking opportunities in companies perceived as less directly exposed to geopolitical disruptions.

Energy giant Saudi Aramco, however, ended the day lower, falling more than two per cent. The drop in Aramco’s share price came despite rising oil prices, illustrating the complex dynamics affecting Gulf markets where geopolitical tensions can simultaneously support commodity prices while dampening broader investor confidence.

Elsewhere in the region, equity markets delivered mixed performances. Qatar’s benchmark index registered moderate losses earlier in the week amid concerns about energy infrastructure and shipping routes, while Egypt and Bahrain also experienced declines. Some markets, including Muscat and Kuwait, saw relatively smaller movements as investors assessed how prolonged instability might affect regional growth and capital flows.

Analysts note that Gulf financial markets have become increasingly sensitive to geopolitical developments due to their close links with global energy supply chains and international investment flows. Large sovereign wealth funds, multinational corporations and global asset managers maintain substantial exposure to Gulf equities, making regional markets more integrated with global financial conditions than in previous decades.

Despite short-term volatility, underlying economic fundamentals across the Gulf Cooperation Council remain relatively robust. Governments across the region continue to benefit from strong fiscal positions supported by hydrocarbon revenues, while economic diversification initiatives have expanded sectors such as logistics, tourism, technology and renewable energy.

Market participants also highlight that the UAE’s capital markets have grown significantly in scale and sophistication over the past decade. The Abu Dhabi Securities Exchange and Dubai Financial Market host some of the region’s largest companies and have attracted international investors through reforms aimed at improving transparency, governance and market liquidity.