UAE Resumes Trading on Abu Dhabi and Dubai Stock Exchanges After War Closure

SadaNews - The UAE has decided to resume trading on the "Abu Dhabi Securities Exchange" and the "Dubai Financial Market" on Wednesday, March 4, after a two-day closure due to the escalation of the US-Israeli war on Iran and the widening conflict in the Middle East.

The Securities and Commodities Authority stated in a statement that trading on the two markets will resume starting Wednesday, in a move aimed at reinstating activity in the financial markets within a regulatory framework that considers stability.

For their part, both the Abu Dhabi Securities Exchange Group and the Dubai Market acknowledged a temporary price decline limit of 5% upon resuming trading, down from the usual 10%. They indicated in separate statements that this mechanism will be subject to ongoing review in coordination with regulatory authorities, allowing for adjustments according to market developments, reflecting a flexible approach to managing potential volatility.

This decision comes as the Gulf region experiences escalating security tensions, following US and Israeli airstrikes on targets inside Iran on Saturday, which resulted in the death of Iranian leader Ali Khamenei and several senior figures, according to relevant authorities. The repercussions of the attack have spread throughout the region, with hundreds of rockets and drones launched towards Gulf countries.

The UAE has announced its interception of dozens of missiles and drones fired by Iran in retaliation for the strikes, a development that poses geopolitical risks that could affect tourist flows and foreign investment, both of which are essential pillars of the country's economy.

The UAE, particularly Dubai, is a major financial center in the region. The daily limit on stock declines may give investors time to absorb potential shocks and curb indiscriminate selling waves that may arise during times of tension.

Geopolitical risks often quickly impact the aviation, real estate, and logistics sectors, while energy companies might benefit from any increase in oil prices.

In this context, analysts at "Citi Group" wrote in a memo on Monday that the Gulf markets may be able to cope with a short-term war in Iran, but warned that a prolonged conflict "could have a profound impact" on the region, referring to the potential for declining confidence and rising risk premiums.

The reopening of the markets, coupled with precautionary measures, is seen as a reassuring message to investors that the financial structure of the state is capable of enduring tensions, while liquidity levels and price trends during the initial sessions will be significant factors in shaping the upcoming phase.