Stock markets in the United Arab Emirates have lost around $120 billion in value since the start of the US-Israel war on Iran, placing Dubai and Abu Dhabi among the worst-hit financial centres globally.
Benchmark indices in Dubai and Abu Dhabi have declined by about 16 per cent and 9 per cent, respectively, since the United States and Israel launched military action against Iran on February 28. The Dubai Financial Market General Index has shed roughly $45 billion in market capitalisation, while the larger ADX General Index has lost about $75 billion.
Elsewhere in the Gulf, stock markets in Qatar and Bahrain have fallen by approximately 4 per cent and 7 per cent respectively, while exchanges in Saudi Arabia and Oman have recorded gains.
On Wall Street, the benchmark S&P 500 has dropped about 7 per cent over the same period, amid mixed signals from US President Donald Trump regarding the duration and objectives of the conflict.
Although the UAE has been less exposed to the global energy shock triggered by Iran’s effective closure of the Strait of Hormuz, the war has dented its position as a key regional travel hub. Tens of thousands of flights have been cancelled, including many routes in and out of Dubai International Airport, the world’s busiest airport for international passengers.
Tourism and travel contributed around $70 billion to the UAE economy last year, accounting for 13 percent of gross domestic product, according to state media.
Haytham Aoun, assistant professor of finance at the American University in Dubai, said the market decline should be seen as a temporary shock rather than structural damage. He noted that while the drop may affect investor sentiment and confidence in the short term, it does not undermine the country’s long-term economic strategy.
“International financial centres are judged not only by market performance during crises but also by the quality of regulation, liquidity management, institutional resilience, and operational continuity,” Aoun said.
Despite the current downturn, the UAE has invested heavily in financial services as part of its diversification strategy and ranks among the leading capital markets in the Middle East. The value of UAE-listed stocks surpassed $1 trillion for the first time in 2024, second only to Saudi Arabia’s $2.5 trillion market in the region.
Dubai also climbed to seventh place in the latest edition of the Global Financial Centres Index, released by Z/Yen Partners in collaboration with the China Development Institute—its highest-ever ranking.
Under a 10-year economic plan unveiled in 2023, UAE leaders aim to position Dubai among the world’s top four global financial centres by 2033.
Burdin Hickok, a professor at New York University School of Professional Studies and former US State Department official in the Middle East, said markets in Dubai and Abu Dhabi are likely to rebound strongly once the conflict is resolved.
“From a long-term perspective, I don’t see this volatility as exceptional,” Hickok said, adding that the fundamental attractiveness of both markets remains unchanged, with no significant shifts in regulation or capital restrictions.