UAE stocks sell off as markets reopen after Iranian missile strikes

Stocks listed in Dubai and Abu Dhabi fell on Wednesday as UAE indexes reopened after a two-day close following Iran’s drone and missile attacks on the country.

Dubai’s benchmark index was last down 4.9%, heading for its worst day since May 2022. Abu Dhabi’s main index fell more than 3%, on track for its sharpest intraday decline since August, while the Nasdaq UAE 20 lost 4.3%.

State bank Emirates NBD led losses in Dubai, falling 5.2%, while Al Buhaira National Insurance Company and Umm Al Qaiwain General Investments in Abu Dhabi led losses, falling 9.6% and 8.7% respectively.

Before the opening, both exchanges said they would temporarily adjust their lower price limit thresholds for securities to -5%.

Over the weekend, Iran launched a wave of missile and drone strikes on the UAE in retaliation for US-Israeli strikes that killed Supreme Leader Ayatollah Ali Khamenei. Iran’s attacks on the UAE have hit Dubai’s international airport, hotels and hotels, as well as civilian and commercial areas. Amazon data centers are suffering.

The closure of airspace around the UAE led to the cancellation of thousands of flights following strikes. Budget airline Air Arabia was last trading down 5%.

In a note published Tuesday, analysts at Citi said they believed the escalation in the Middle East conflict could have a “profound and potentially long-lasting impact on the MENA region.”

Dubai’s Emaar and Abu Dhabi property developer Aldar are most at risk of being hit by earnings per share growth, they said, while lenders NBK and ENBD have the biggest downside risk in the banking space.

“The valuation impact may vary (and potentially be more severe) as equities lose value due to an increase in the equity risk premium,” Citi analysts said.

“For property developers, sales may decline as property prices and demand for properties decline, but immediate revenue from the current situation may be less severely affected (as revenue is based on converting backlogs of sales that have already been made).

“However, the perceived risk premium for MENA stocks (especially stocks owned by foreign shareholders or that appear relatively valuation-rich) may increase significantly.”

Wednesday’s sell-off in the Gulf follows days of losses in stock indexes around the world.

While it was seen that sales continued in Asia on Wednesday morning, European stock markets opened in the positive zone, ending two consecutive days of large losses in the region. US stock futures pointed to a negative open after all three major averages ended Tuesday’s session in the red.