Conflict Spills into Mideast Financial Hub! UAE Shuts Major Exchanges for Two Days
On Monday, the UAE Securities and Commodities Authority (SCA) announced that its two primary markets will suspend trading for two days this week to avert a potential market collapse. The move follows multiple strikes on the UAE as Iran retaliated against air strikes by the U.S. and Israel.
In an emailed statement, the SCA confirmed that the Abu Dhabi Securities Exchange and the Dubai Financial Market will be closed on March 2 and 3, local time. The Authority added: "The Authority will continue to monitor regional developments and assess the situation on an ongoing basis, taking further measures as necessary."
Since Saturday morning, Dubai and Abu Dhabi have been targeted by hundreds of missile and drone attacks. Iran has been responding to strikes originating from the U.S. and Israel. While most attacks have been intercepted—with no immediate reports of casualties or widespread damage—the hostilities have rattled local residents.
The strikes pose a significant threat to the UAE economy and its status as a stable hub for finance, logistics, and tourism.
"Attacks on Iran by the U.S. and Israel could trigger volatility in UAE real estate demand, potentially reducing new housing supply by 350,000 units, while also curbing footfall at Dubai malls and the broader contribution of tourism to the retail and hospitality sectors," Bloomberg Intelligence analysts, including Edmond Christou, wrote in a report.
"UAE developers such as Emaar, along with local banks with greater cyclical exposure, remain vulnerable."
With a market capitalization of $1.1 trillion, the UAE equity market is the 19th largest in the world and holds a 1.4% weighting in the MSCI Emerging Markets Index.
Such market closures are exceedingly rare in the country. Outside of scheduled holidays, UAE exchanges typically only close during periods of national mourning, such as following the death of President Sheikh Khalifa bin Zayed Al Nahyan in May 2022.
However, shuttering securities markets during periods of uncertainty and volatility is not unprecedented globally. Recent examples include Turkey, which suspended trading for a week following its 2023 earthquake (with stocks rallying upon reopening); Russia, which halted markets for nearly a month at the onset of the 2022 Russia-Ukraine conflict; and Greece, where the Athens Stock Exchange suspended trading for five weeks in 2015 due to the sovereign debt crisis, seeing sharp declines when operations resumed.
Elsewhere in the Gulf, the Kuwait Capital Markets Authority stated that the country's stock exchange will resume trading on March 2, following a suspension of operations on Sunday.