Gulf In Focus

Bankers contemplate post-conflict prospects in Dubai

Nearly four weeks after the launch of Iranian attacks against Dubai and the wider Gulf region, the emirate’s bankers are contemplating a significantly altered financial landscape, even as hopes rise for an end to hostilities.

While buildings linked to financial institutions have received only minimal damage, strikes on Dubai International Airport, a luxury hotel and local residential areas — let alone in the wider United Arab Emirates — have prompted several bankers to leave the emirate for good.

Those that have chosen to remain face a significantly changed reality, as authorities seek to restore trust in what had previously been one of the region’s most dynamic economies, which now finds much of its core economic model under threat.

The UAE has borne the brunt of missile and drone attacks by Iran since late February, in response to strikes launched against the latter by the US and Israel, even as attacks in recent days have slowed.

With Iran explicitly targeting financial institutions across the Gulf in retaliation for strikes on state-owned bank facilities in Tehran, many Dubai-based bankers have decided to leave the country for good, while multiple institutions have allowed employees to work from home.

Israel- US and Iran war wipes $120bn off Dubai, Abu Dhabi stock markets

The United Arab Emirates’ stock markets in Dubai and Abu Dhabi have lost around $120bn in value since the start of the US-Israel war on Iran, placing them among the hardest-hit financial markets worldwide.

Dubai and Abu Dhabi’s benchmark indexes have plunged about 16 percent and 9 percent, respectively, since the United States and Israel launched their war on Iran on February 28.

Since the start of the war, the Dubai Financial Market (DFM) General Index has lost about $45bn in market capitalisation, while the larger ADX General Index has shed about $75bn.

Financial markets in Qatar and Bahrain have dropped about 4 percent and 7 percent, respectively, while exchanges in Saudi Arabia and Oman have racked up gains.

On Wall Street, the benchmark S&P 500 has dropped about 7 percent over the same period amid US President Donald Trump’s mixed messages about the expected length and goals of the war.

While the UAE has been less exposed to the global energy shock caused by Iran’s effective closure of the Strait of Hormuz than many of its Gulf peers, the conflict has dealt a blow to the country’s standing as a regional travel hub.

Tens of thousands of flights have been cancelled due to the war, many of them on routes in and out of Dubai’s international airport, the world’s busiest for international passengers.

UAE’s economy gets stronger in times of regional unrest?

Periods of regional uncertainty often reveal the true strength of nations. In the case of the UAE, experience has repeatedly shown that moments of geopolitical tension do not slow the country’s progress, they often reinforce it.

For decades, this region has experienced successive political and economic shifts. Yet throughout these cycles of uncertainty, the UAE has consistently stood out as a model of stability, resilience, and confidence in the future.

Today, the UAE and the wider Arabian Gulf region face renewed attempts to challenge the stability that has supported their remarkable development. However, the UAE continues to respond with calm strategic judgment and a clear long-term vision. By focusing on the strength of its development model and maintaining the credibility of its economic partnerships, the country is well positioned not only to withstand regional pressures, but to emerge from them stronger.

Economic wings: Saudi Arabia looks to Africa

Not so long ago, Saudi Arabia was a country that, in many ways, liked to keep itself to itself. The Kingdom has, of course, been a prolific exporter of oil to world markets for decades. For much longer, it has also welcomed millions of pilgrims from across the Muslim world for the Hajj pilgrimage to Mecca.

But, until recently, few Saudi companies outside the oil sector achieved significant success when venturing overseas. Beyond the annual Hajj, Saudi Arabia did not make much effort to attract tourists. With its state coffers filled to bursting with oil revenues, the Kingdom’s secretive decision-makers felt little need to build more expansive business ties with the outside world.

Government development bonds matter for Oman’s economy?

Subscriptions to the 82nd issue of Government Development Bonds opened last Tuesday, with a value of RO 75 million (USD 193.5 million) and an option to increase the issuance by an additional RO 25 million ($64.5 million). This is the third issuance of its kind this year, and the Sultanate of Oman plans to introduce further development bond issues during the remaining months of the current year.

As is well known, investing in government development bonds is considered a conservative investment option suitable for a certain category of investors with strong financial capacity, as well as for those seeking to diversify their investment portfolios.

Sources interested in these issuances believe that investing in government bonds is a good and relatively low-risk investment compared to many local alternatives, especially for investors seeking security and fixed income, as the return on this issuance reaches 4.25 percent annually

Government bonds are among the least risky investment instruments locally, since they are backed by the state, compared to other assets individuals may hold in their portfolios such as real estate, stocks, and business ventures.

The objective of these issuances is to continue supporting the country’s financial sustainability plans and efforts, while diversifying sources of funding for the annual state budget, in addition to reducing reliance on external borrowing, lowering the public debt servicing ratio, and strengthening and expanding the Omani capital market through attractive opportunities for both local and international investors.