Dubai and Abu Dhabi equities initially fell sharply this week as trading resumed following a rare two-day shutdown triggered by Iranian strikes and escalating conflict between Iran, the United States, and Israel.
The Dubai Financial Market General Index (DFMGI) dropped roughly 4.6-4.8% in early trading, losing about 300 points to the low-6,200 range, while the Abu Dhabi Securities Exchange (ADX) benchmark declined around 3%, slipping toward 10,100–10,150 levels as markets reopened on March 4, 2026.
Selling was broad-based across the sectors that dominate UAE benchmarks. In Dubai, major firms including Emirates NBD, Dubai Islamic Bank, Emaar Properties, and Air Arabia traded sharply lower, with several stocks hitting the exchange’s temporary −5% daily downside limit.
Trading Halt and Controlled Reopening
The declines followed a precautionary decision by the UAE’s Securities and Commodities Authority (SCA) to suspend trading on both exchanges on March 2-3, after Iranian missile and drone strikes raised regional security risks.
The closure temporarily froze trading in exchanges representing more than $1 trillion in combined market capitalization. Regulators reopened markets under controlled conditions, including temporary downside limits on DFM to help stabilize price discovery.
Valuations and Volatility Spike
Despite the sell-off, valuation metrics suggest UAE equities remain moderate relative to historical levels.
The DFMGI trades at a trailing price-to-earnings ratio of about 10.1, with a forward P/E near 10.3. That sits 12% below the three-year peak of 11.75 reached in February 2026.
Market volatility has risen sharply. 30-day price volatility climbed to roughly 21.8%, compared with 16.2% in the previous session and an average of 13.8% over the past month.
Dividend yields remain an important support factor, with the DFM index offering roughly 4.6% trailing dividend yield, attractive for income-focused investors.
ETFs Tracking UAE Markets
The performance of UAE equities is also reflected in international exchange-traded funds that track the country’s markets.
One such fund is the SP Funds S&P UAE Shariah ETF, which tracks a Shariah-compliant basket of UAE equities and provides international investors with exposure to companies listed on both DFM and ADX.
Another is the Xtrackers FTSE ADX UCITS ETF, which specifically tracks the FTSE ADX index and offers institutional investors direct access to Abu Dhabi’s large-cap stocks, including banks, telecoms, and ADNOC-related firms.
These ETFs often act as a liquidity bridge between global capital markets and local Gulf exchanges, meaning geopolitical developments in the region can quickly translate into ETF flows and influence market sentiment.
Thursday Rebound Signals Improving Sentiment
By Thursday, March 5, however, sentiment had improved significantly.
UAE equities staged a strong intraday rebound, with more than 30 stocks advancing across the exchanges and market breadth turning positive. Heavyweight companies led the recovery as investors stepped in to buy the dip after the sharp sell-off earlier in the week.
The rebound reflects renewed confidence as early selling pressure faded and bargain-hunting emerged. Strong participation across sectors suggests investors remain willing to re-enter the market despite heightened geopolitical uncertainty.
A Test of Market Resilience
The week’s volatility illustrates how quickly geopolitical shocks can reshape investor sentiment across Gulf markets.
Yet the swift regulatory response, including temporary closures, controlled reopening measures, and disclosure guidance highlights the institutional frameworks designed to maintain stability during periods of extreme uncertainty.
For now, UAE equities remain caught between two opposing forces: supportive oil prices and strong domestic growth on one side, and geopolitical risk weighing on investor confidence on the other.
