Dubai stocks slip to 9‑month low while Tadawul holds steady

• Selling pressure renewed on DFM
• Few signs that Iran war will end soon
• Saudi economy ‘much less impacted’

Dubai’s stock index slid to a nine-month low on Wednesday as renewed selling pressure more than wiped out the previous day’s gains on worries about the longer-term impact of the Iran war.

Iran has extended its strikes on Israeli military and civilian infrastructure, as well as hitting several Gulf countries, in response to US-Israeli attacks that began 10 days ago.

There is little indication of an imminent pause in hostilities despite US President Donald Trump predicting this week that the war could end “very soon”. As of Wednesday, UAE air defences had intercepted 262 Iranian ballistic missiles and more than 1,400 drones, according to the defence ministry.

These attacks have spooked equity investors, with Dubai’s benchmark falling 2.4 percent to 5,726 points on Wednesday. The latest drop, after a fleeting rally one day earlier, takes its losses to nearly 14 percent since the war began. The market hit a 20-year peak in mid-February.

Emaar Properties, the exchange’s most active stock by volume and value, fell 4.7 percent. As well as being Dubai’s largest real estate developer, it generates about one-fifth of its revenue from its malls, hospitality and entertainment division.

Twelve stocks fell by more than 4 percent including Emirates NBD, Dubai’s biggest bank. 

Abu Dhabi’s index also resumed its slump on Wednesday, falling 1.3 percent to 9,865 points.

“Saudi Arabia and Oman’s economies are proving more resilient, while the economies of Kuwait, Qatar and the UAE are more likely to be affected by this conflict, clearly due to the situation in the Strait of Hormuz,” said Nishit Lakhotia, chief investment officer for equities at Sico Bank in Bahrain.

Mena asset managers had been overweight on UAE stocks because of the country’s bullish economic outlook and strong GDP growth, according to Lakhotia. The same was true of Qatari companies likely to benefit from the country’s huge expansion of LNG production. 

“Many UAE blue-chips were trading at or near all-time highs and yet weren’t expensive in valuation terms because earnings growth was strong and was likely to continue, so it made sense for investors to be overweight in these stocks,” he said.

In contrast, fund managers had been underweight or neutral on Saudi stocks given banking sector liquidity issues, state spending rationalisation and pressure on the petrochemical and energy industries.

“Now fund managers could be repositioning by reducing their UAE stock holdings and reallocating some of this money to Saudi Arabia which has a more domestic-oriented economy and has been much less impacted by the conflict,” said Lakhotia.

Riyadh’s benchmark was up 0.1 percent at 14:45 GMT, taking its gains this month to 2.2 percent.

Qatar’s index slid 0.9 percent, its third decline in four sessions.

More from the Iran conflict:

• First Saudi IPO of the year posts gains despite conflict
• Oil prices rebound as Iran conflict grinds on
• Dubai residents resigned but optimistic in face of Iran war